07 August 2012 6:57am

Outgoing Reserve Bank of New Zealand governor Alan Bollard offered a series of sobering observations on the New Zealand economy and the implications for banks in one of his last speeches after 10 years in the job.

Households and agribusiness will have to adapt to lower levels of leverage, trends that may drag down property prices and add to the constraints on credit growth for New Zealand’s (largely foreign owned) banks, he said.

Among Bollard’s reasons for these projections are New Zealand’s modest rates of economic growth and a rise in incomes that is "still well below...