It has released its latest outlook for the New Zealand banking sector.
The banks are likely to suffer a low level of credit losses over the next few years, even though interest rates are set to rise, S&P analyst Nico De Lange says.
But he said there was the threat of a sharp fall in house prices, especially if there is an external shock to the economy.
"Consequently, we consider the stand-alone credit profiles of all banks and credit unions in New Zealand as remaining subject to negative pressures, as reflected in a negative rating outlook on a number of these banks and credit unions.”
Interest rates and the influence of the loan-to-value restrictions could keep a lid on house price inflation, he said.
And banks should be able to absorb the impact of any loans that went bad as interest rates started to rise this year.
The Reserve Bank is likely to start increasing interest rates next month – the first central bank to do so.
BNZ’s economists said while the Reserve Bank was leading the charge internationally, others would follow suit.
“Consensus forecasts see the Bank of Canada raising rates by 25bps in Q2 2015 and for the US Fed to be moving higher from late 2015. Consensus also sees the RBA cash rate moving higher in Q1 2015 (although this is premature in our view).”