New Zealand's banks are expected to remain in a strong position this year but will face tougher funding challenges and ongoing pressure from technology changes.
Banks have made record profits in recent years as the housing market has soared pushing up house price and loan amounts.
While the housing market might be slowing in Auckland John Kensington, head of financial services at KPMG, believes banks will continue to perform strongly.
"I think what we will see, and the banks have proven it over the last five years, they are inherently very strong, very well run and able to adapt to change."
While they might not continue to break records for profits Kensington doubts any will post losses because bank balance sheets remain big.
"But what they will have is some challenges in some areas."
Kensington says the banks have enjoyed the ability to get cheap deposit funds locally and an easy market to raise money off-shore.
But with the US Federal Reserve rate heading upwards funding costs could also rise.
"And there are minor concerns about the level of borrowing done off-shore.
The credit rating agencies will look at that."
In the middle of last year banks hit a point where they were lending out more than what they were getting in in deposits - a situation that affects their core funding ratios.
That situation drove more competition for local deposits forcing the banks to increase interest rates despite cuts to New Zealand's official cash rate.
The banks have also signalled that mortgage rates are likely to increase this year with some already bumping them up at the end of last year.
Kensington says the banks face a benign situation from the New Zealand economy which is doing pretty well.
But a global issue could put pressure on them.
"There is really nothing on the horizon in New Zealand that is going to give rise to problems.
"It's really going to be a global issue - like Trump or the Asian slow-down and any trickle-down affects.
"Brexit or Trump could cause a hiccup to trade. The thing that will upset the economy will be something external."
Kensington said turning the tap off immigration would be a big mistake for New Zealand.
"People are saying it has got to stop because its forcing house prices to rise.
"But it is also bringing a large amount of money into the country. We need the deposits and skills. If we turn that tap off will stop the money and the investment.
Standard and Poor's banking analysts Nico de Lange and Andrew Mayes say it should be a steady as she goes kind of year for the banks but there are some risks they will be watching closely.
De Lange said New Zealand overall had a low-risk banking system and the profitability of New Zealand's banks compared well with peers internationally.
"They have a high net interest income and low cost base. That is all good news."
But strong credit growth driven by the property market boom has analysts worried and de Lange says it's an area that it needs to continue monitoring.
"Of course we are not the only ones worried about this."
The Reserve Bank has already stepped in using its macroprudential tools to slow the market.
"To an extent it has been successful but it has not been able to stem the growth in total."
The rating agency is also closely watching whether the government allows the Reserve Bank to use a debt to income restriction tool.
De Lange said credit growth had been fairly strong but looked like it was now dampening down.
Mayes what that means for the banks is that he expects lending to come off a bit.
Banks have been under margin pressure with funding costs rising as they have had to borrow more on the international market.
Mayes says he expects some of those margins to be recovered this year as the banks re-price loans.
"We expect lending growth to come off a bit."
Mayes is predicting reasonably flat profits for the banks in 2017. He expects nothing but upward pressure on funding costs.
De Lange said the credit loss rate had been really low in recent years with not a lot of impairments.
But he expects it to creep up this year.
While dairy was beginning to recover there was likely to be a lag effect from those who had not done as well to get through the last couple of years.
"Looking forward there is a bit of a lag effect if one looks at dairy."
But dairy only made up 7 per cent of the portfolios across the main four banks versus residential and commercial property which made up two-thirds of loans.
"Commercial property is still quite good. Significant infrastructure is needed for Auckland."
"We just think that it is probably as good as it is going to get."