Profits at New Zealand's banks were strong in the June quarter but the Covid-19 lockdown has added new uncertainty.
The banks collectively made $1.452 billion in the three months to June, according to KPMG's latest Financial Institutions Performance survey.
That was 11 per cent down on the record March quarter but was still one of the strongest quarters ever.
John Kensington, KPMG's head of banking and finance, said the June quarter saw a continuation of trends from the last few quarters with high mortgage lending driving strong profits.
"The September lockdown has since added new uncertainty and the RBNZ's upcoming decisions and timing thereof around the OCR [official cash rate] and LVR [loan to value ratio] lending will have an impact on the future."
The RBNZ had been expected to increase the OCR at its August monetary policy announcement but kept it on hold at 0.25 per cent after the country went into a nationwide lockdown a day earlier.
Economists now expect it to be increased at the October 6 meeting instead by 0.25 percentage points.
The RBNZ also undertook consultation on further tightening how much banks can lend to owner-occupier home loan borrowers with low deposits this month and is expected to make an announcement in late September on a final decision before implementation from October 1.
Mortgage lending has been a big driver of profits at the banks in the last year. All types of lending in the June quarter rose 2.2 per cent to $473.67b but rose by 6 per cent for mortgage lending.
Each month in the June quarter saw more than $8b lent on residential property while consumer, business and agriculture lending decreased over the quarter.
Kensington said owner-occupiers and first-home buyers spurred the lending growth with over 9000 first-home buyers getting on to the property ladder during the quarter - the second highest number on record.
"It's possible that these are the first signs of recent tax changes coming into effect. Leveraged investors may be deterred by the tax changes, or by yields from renting looking less attractive at such high purchase pricing.
"There is evidence that the market has started to slow slightly, so we may see fewer of these mortgage lending records."