Monthly New Credit Flows Survey Procedures and Definitions

This document has been updated following trials and parallel runs. Feedback is welcome at any time to enable quality improvements for all users. PROCEDURES & DEFINITIONS Monthly New Credit Flows Survey February 2025 (V2.0) Please contact the Reserve Bank Statistics Unit (statsunit@rbnz.govt.nz) to discuss these procedures and definitions if in any doubt about their meaning or if following them will produce an internal inconsistency with your available financial data. Purpose of Collection The purpose of the New Credit Flows Survey is to better understand the provision and pricing of credit in the economy. The data will be used to support macroeconomic analysis and prudential supervision of the banking sector and will complement bank balance sheet information. It will also inform analysis of the impact of monetary policy and other factors on household and business lending rates. We want to collect new credit events drawn down or facilities loaded in the reporting month. This is funding available to a customer and not commitments as defined for the LVR reporting. General Requirements Data provided in the template must be from the entity named on the contact page. Revisions Policy We would not anticipate the need to seek revisions unless there are “material” changes. The definition of “material”, however, will need further consideration. It is likely to vary depending on the items concerned. Reporting Guidelines Financial data should be reported:
 As new drawdown values, as at the end of the reporting period.
 Values should be reported in millions to three decimal points, i.e. to the nearest thousand New Zealand dollars. For example $1,234,567.89 is reported as 1.235.  Percentages should be reported in the Number format, without percentage signs, to two decimal points. For example 3.00% is reported as 3.00 (and not 0.03).  Where there is no value to report, please leave the cell blank, i.e. do not enter zeros, ‘n/a’, or other text. Collection Authority The information asked for is collected under section 93 of the Reserve Bank of New Zealand Act (1989).

2 New Credit Flows Survey – Procedures and Definitions Confidentiality The contents of individual surveys will be treated as strictly confidential. No survey respondent's collected data will be able to be identified in any published materials. Date of reporting Based on the feedback received we request that the monthly New Credit Flows survey is prepared for the most recent calendar month, spanning the full month. We request submission of the report on the following month within 12 working days or the second working day after the reference period (if impacted by holidays). If you have difficulties meeting this month’s reporting deadline please get in touch to make alternative arrangements. We expect that some teething issues will remain while we embed this new collection. We are committed to working with you to ensure this process is appropriate and can be executed as efficiently as possible.

3 New Credit Flows Survey – Procedures and Definitions Contents Purpose of Collection _________________________________________________________________________ 1 General Requirements_________________________________________________________________________ 1 Revisions Policy 1 Reporting Guidelines 1 Collection Authority 1 Confidentiality 2 Date of reporting 2 Background____________________________________________________________________________________ 4 New Credit Flows – What we are trying to collect 4 Definitions _____________________________________________________________________________________ 5
4. Loans fully secured by residential mortgage 5
4.1 Owner occupier property use 5
4.2 Residential investor property 5
4.3 Business loans secured by residential property 5
4.4 Loans not secured by residential property 5
4.46 Non financial business 5
4.46.1 Corporate business (large/institutional) 6
4.46.2 Corporate business (medium) 6
4.46.9 Retail business (small) 6
4.46._11 Dairy farming 6
4.46._12 Sheep, beef cattle & grain farming 6
4.46._13 Horticulture 6
4.46._19 Other agriculture on farm 6
4.46._21 Investment property 6
4.46._22 Property development – commercial 6
4.46._23 Property development – residential 6
Appendix A: Frequently Asked Questions ____________________________________________________ 8

4 New Credit Flows Survey – Procedures and Definitions Background The Stress Indicators Survey was set up as a weekly data collection in response to the outbreak of COVID-19 in New Zealand in March 2020.  The Stress Indicators Survey started out as one tab of data, ‘Stress Indicators’, for events during the reference week.  An additional tab to show the ‘as-at’ position was introduced in May 2020.  The New Credit Flows tab was introduced in June 2020 to capture credit flowing through the system.  As the economic impact of COVID-19 had lessened by April 2021, the Stress Indicators Survey was discontinued, contingent on economic conditions.  The New Credit Flows Survey was set up as a standalone monthly collection from April 2021. The New Credit Flows data fills certain data gaps, particularly for business lending. Weighted Average Interest Rate data helps inform policy decisions. New Credit Flows – What we are trying to collect The New Credit Flows survey provides information about new credit being drawn within the month and pricing of that credit. This data also helps address gaps we currently have with business lending data. The granular data breakdown aligns the reporting categories closely with the Bank Balance Sheet survey. We also collect the pricing of the new credit as floating rate loans and fixed rate loans so we can distinguish pricing between the two. We are not collecting repricing data, this survey is solely for new credit events. The new lending for the month is to be reported on the basis of new credit events completed in the reporting month. This allows for clean reporting of new activity. Term loans drawn in the month get reported when the credit event is completed in the reporting month. In the case of a revolving facility (or other limit based products) we don’t expect the churn within an existing facility to be reported, as this activity is based on customers operating within already approved/loaded limits. We want to capture the new credit facility, only report data in the new credit flows survey once a new limit is loaded against a customer’s account and available for use, along with being loaded in bank systems. If there are already facilities loaded and these get increased then we would expect only the additional credit amount to be reported. We have had feedback that the Revolving Credit limit is an off-balance sheet commitment and acknowledge this differs from on-balance sheet actual drawdowns. Currently the Bank Balance Sheet survey collects undrawn commitments which would include limits loaded but not drawn against and it is this new lending we would like to capture. We have included an appendix with examples that will hopefully clarify the understanding for reporting. Feel free to contact us at statsunit@rbnz.govt.nz for any examples where further clarification is required. Please refer to Appendix A for answers to Frequently Asked Questions about the new lending definition.

5 New Credit Flows Survey – Procedures and Definitions for the New Credit Flows Survey are intended to be in-line with those used for the Monthly Bank Balance Sheet Survey ‘Assets by repricing’ tab. Definitions for the Bank Balance Sheet Survey are available for download from https://www.rbnz.govt.nz/statistics/surveys/bank-balance-sheet.
4. Loans fully secured by residential mortgage
Includes loans secured by a mortgage over a residential property. Excludes loans cross collateralised between residential property and other assets where the share attributable to the residential property cannot be identified.
4.1 Owner occupier property use
Owner occupiers are borrowers who own or are in the process of buying or building the house or flat they will live in as their principal place of residence. An owner can occupy more than one property, e.g. a family home and a holiday home. See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.1, row 31
4.2 Residential investor property
Investors are entities or persons borrowing for the purpose of building or purchasing residential property to rent. See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.2, row 49
4.3 Business loans secured by residential property
Business loans where the only security type is a residential mortgage loan. The borrower declares that the loan is for business purposes as part of the loan application. Exclude loans cross collateralised between residential property and other assets (include in 4.4 Non-residential mortgage loans). See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.3, row 330
4.4 Loans not secured by residential property
Include loans NOT secured by residential property, or loans cross collateralised between residential property and other assets where the share attributable to the residential property cannot be identified. See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.4, row 619
4.46 Non financial business
See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.46, row 663

6 New Credit Flows Survey – Procedures and Definitions
4.46.1 Corporate business (large/institutional)
Annual turnover greater than $50m. Likely to include large corporates or institutional clients; some issue their own securities and can include branches of non-resident corporate businesses See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.46, row 665
4.46.2 Corporate business (medium)
Annual turnover greater than $1m but less than $50m. Likely to include medium sized business entities or corporates with employees. See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.46, row 752
4.46.9 Retail business (small)
Annual turnover less than $1m. Likely to include small business entities like sole traders or small partnerships. See Monthly Bank Balance Sheet survey, Tab: Assets by repricing, Q4.46, row 839 4.46._11 Dairy farming A016. 4.46._12 Sheep, beef cattle & grain farming A014. 4.46._13 Horticulture Horticulture and fruit growing (A011-A013). 4.46._19 Other agriculture on farm Other Crop Growing (A015), Poultry Farming (A017), Deer Farming (A018), and Other Livestock Farming (A019). 4.46._21 Investment property Primarily commercial property for capital value appreciation and associated cash flows. 4.46._22 Property development – commercial Primarily construction of office, retail or other commercial developments. 4.46._23 Property development – residential Primarily residential sub-division and residential apartment developments.

7 New Credit Flows Survey – Procedures and Definitions
Table 1: Bank Balance Sheet (BBS) references for New Credit Flows Survey items
BBS Question Item BBS Rows
4.46._1 Agriculture (on-farm) lending 667, 754, 841 4.46._11 Dairy farming 669, 756, 843 4.46._12 Sheep, beef cattle & grain farming 678, 765, 852 4.46._13 Horticulture 687, 774, 861 4.46._19 Other agriculture on farm 696, 783, 870 4.46._2 Commercial property lending 705, 792, 879 4.46._21 Investment property 707, 794, 881 4.46._22 Property development - commercial 716, 803, 890 4.46._23 Property development - residential 725, 812, 899 4.46._29 Other commercial property lending 734, 821, 908
4.46.19 All other new corporate large business lending 743
4.46.29 All other new corporate medium business lending 830
4.46.99 All other new small business lending 917
4.48 Households - Personal/consumer 934
4.48.1 Overdrafts 936
4.48.2 Credit cards 937
4.48.3 Term Loans 938
4.48.9 Other 940
Note:
The _ symbol in BBS question numbers replaces the number 1, 2 or 9 because these items are used once for each size of business.

8 New Credit Flows Survey – Procedures and Definitions
Appendix A: Frequently Asked Questions
New term loan limit approved and loaded but not drawn – Only include once the credit event has been completed and loan drawn (or limit loaded in the case of a revolving facility). New revolving loan limit approved but not drawn – Only include once the credit event has been completed and limit loaded against the customer’s account and active for use. In the case of a revolving facility only report the new or additional limit value and not the general churn/use within the facility. Existing revolving loan drawings - Do not include. We do not want the monthly churn/use within the existing limit. This survey is capturing only new credit events in the reporting month only. Confirm you are looking for us to report all new arranged facilities, that have been newly agreed in the month including top ups (so therefore can be linked to a credit event) and are then also drawn down? – We are wanting all new credit events occurring within the reporting month to be included. This is once the customer has the lending made available, drawn against their account or in the case of a limit facility the limit has been loaded and is available for use. New facilities arranged i.e. limits loaded in June but drawn in July would be reported in July? – The time at which the new limit is loaded (credit event occurred in June) and available for use is when the reporting would occur. Not necessarily when the customer decides to draw against the available limit. By increased limit do you refer to a limit increased rather than a limit that has been extended for a further period of time (i.e. rolled over)? - Yes, any limit increase. We are seeking new events, not existing facility limit extensions. Please confirm an increase to an existing limit will be reported as the difference between the new and old limit? - Yes we want to capture the new credit event for the month. So just the new portion that has been increased. A new commitment for home lending is extended to the customer, the customer is unsuccessful at Auction or Tender, the loan in undrawn. Please confirm this would not be expected to report as a new drawing? Same for other forms of pre-approval? - Correct, only once the loan has become a new credit event and drawn down or limits available should it be reported. Customer is unsuccessful for a period but pays off other debts allowing for a larger commitment to be provided to the customer in August say $1.2m, the new commitment finds a home, and the loan is drawn $1.195m in October. Please confirm the drawing of $1.195m would be reported in the October return. - Correct the $1.195m drawn down (new credit event) in October will be reported in the month of October's data, not the original approval commitment date. Repricing – An existing home loan of $500k on a floating rate is fixed during the month. No new lending. Do we report this event as Fixed +$500k and floating -$500k flow in the report? - No, we don't want to capture existing lending roll overs or repricing.

9 New Credit Flows Survey – Procedures and Definitions Customer has 2 home loans in aggregate for $500k but takes the opportunity to combine this into a new single loan and fix for three years. Total limit is still $500k and no credit decision/assessment is required. There may or may not be a change in “fixed vs. floating” interest rates. On the basis that no credit assessment has been made, no overall limit change, and no new draw we would not report this as new in the survey? Yes this is correct, we don't want to capture existing lending roll overs or repricing/restructures, so in this example you would not report in the survey. Customer has 2 homes loans worth $500k and restructures these into four new loans (e.g. 2 fixed, 2 floating) again totalling $500k with no credit event. Same logic as above and not reported? – Yes, this is correct, we don't want to capture existing lending roll overs or repricing/restructures, so in this example you would not report in the survey. Customer has 2 existing loans for $500k. $250k floating $250k fixed. They request a top-up by $50k bringing their new total lending to $550k and at the same time restructure the lending across 4 new loans (some fixed, some floating, with different fixed and floating maturities) and none of the new loans specifically can be directly attributed to the $50k top-up. Do you want just the $50k reported as flow and fixed vs floating determined by the following logic $550 being (3 *$100k fixed

• $250k floating) less ($250k floating and $250k Fixed) = $50k fixed new draw? Or do we report
  the full $550k as new lending – Please report just the new credit event ($50k), not the existing lending being restructured. Please report the additional new credit event in the bucket that has the largest proportion of lending, so in this case the fixed loan bucket. In the scenario above, if 3*$100k fixed portions are of different interest rate fixed terms (say 1, 2 & 3 years respectively), how should the $50k top up be attributed to those buckets – In a scenario where total lending is evenly split between fixed terms such that there is no single fixed term with a larger proportion of lending, we ask that you please report the new lending ($50k) in the bucket with the shortest term. Purchase of a new investment property instead of a vanilla top-up. The lending is restructured, original loan is $250k fixed, and the new loan total is $1.5m, with $1m fixed $0.5m floating, Is the new drawn $1.25m split $750k fixed, $0.5m floating? - Only report the new additional credit ($1.25m). Please report in the bucket that has the largest proportion of lending, so in this case the fixed loan bucket. Parent/child loan groups especially for the business lending book. They have an overarching parent limit and the child drawn loans sit underneath these. The children may have limits of their own (or may not) but they defer to the parent. Typically the child deals will have a lot of churn and shorter maturity profiles than their parent limit. Please confirm the approach of monitoring the parent limit or aggregate of the children for movement and then report on the movement of aggregate drawn amount across the group to avoid report churn? – We only want to capture new credit events, not the churn within existing lending and/or limits across the group. Restructure with change of product – Should one product (e.g. overdraft) be changed into another (e.g. overdraft to revolving home loan) then these could be reported as new lending even if the limit has not increased (e.g. $50k overdraft to $50k home loan). - Only looking for reporting of new credit events not a product change of existing lending facilities. Restructure within a larger lending group – Should lending be restructured across customers (e.g. from a joint customer into a family trust or from one business entity into another) then these could be treated as a credit event and we would report this all as new lending (even though lending across the group has not increased). - Again only looking for reporting of new credit events not a product or structure change of existing lending.

10 New Credit Flows Survey – Procedures and Definitions Repricing – An existing loan of $500k on a floating rate is fixed during the month. No new lending. Do we report this event as Fixed +$500k and floating -$500k flow in the report? – Please do not report this as a new credit event. We are not looking to capture repricing/restructures. Progressive drawdowns (e.g. for housing under construction) – a new $1.5m construction loan is approved in June 2021, conditional on customer funds being used first, by April 2022 customer funds are exhausted, and part of the total limit $200k is available to customer with further tranches becoming available to customer over time as build progresses. Do we report this as a new limit of $200k drawn in April and see the individual limit increases each time a new limit meets the preconditions and is drawn? – In the case of construction lending please report each of the new credit events (progressive drawdowns) as they occur. In the example provided $200k would be reported in the April new credit flows survey and then each subsequent progressive drawdown will be reported as that new credit event occurs. For new revolving loans limit loaded against the customer’s account and active for use but not yet drawn down, should we apply the interest rate on the drawn portion of the facility limit to the undrawn portion? Where the new revolving loans limits do not have any draw portion, should we report a Zero weighted average interest rate? - We have some suggestions on how to treat new lending which does not have an associated interest rate until the facility is drawn:

• Please try and allocate an interest rate to a value with an unknown interest rate using the
  other new lending in the same category that does have associated rates (new lending in the same cell on the survey template).
• If there is no other lending in the category, please refer to the month prior to allocate an
  interest rate to the new credit event.
• If once again there is no lending for the category in the prior month, then please make an
  estimation of what the interest rate that would be applied.