Fitch Ratings said New Zealand's four largest banks were well-positioned to meet the Reserve Bank's capital proposals.
The agency said the banks' ability to generate solid and sustainable profits through the cycle meant they should be well-positioned to meet the Reserve Bank's capital proposals.
"The banks' strong domestic franchises also allow for a stable business model that helps to offset continued high macroeconomic risks in the New Zealand," it said in a report.
High household debt is broadly stable but was a key risk, Fitch said.
Households remain susceptible to a shock in interest rates or the labour market, although this is not Fitch's base case, it said.
Partly offsetting this risk is the low interest rate environment, which has resulted in the percentage of household income used for debt-servicing remaining lower than in 2009.
Fitch expects a modest deterioration in asset quality over the next year, in part because impaired loan levels are around historical lows.
However, significant deterioration is unlikely to emerge unless there are large external shocks.
Earnings growth is also likely to remain under pressure due to slowing credit growth and rising compliance and investment expenses. Nonetheless, the agency believes the New Zealand's major banks will continue to outperform similarly rated peers in Fitch's core profitability and asset quality metrics.
ASB Bank economist Nick Tuffley said earlier that the Reserve Bank's proposed tightening of capital requirements for the banks could permanently dampen the economy by more than one per cent of GDP.
The proposal would also equate to an additional half a per cent on mortgage rates - although that would likely be offset by a lower official cash rate, he wrote in a report.
The Reserve Bank has proposed to increase capital requirements for locally-incorporated NZ banks, by 2023. The required Tier 1 capital ratio for the "big four" (ASB, BNZ, Westpac and ANZ) will be increased from 8.5 per cent to 16 per cent of risk-weighted assets.
Tuffley estimates that would equate to an additional $19b to $22b for local banks by 2023 and that it would constrain credit supply, slowing the economy.