KPMG's 2020 Non-Bank Financial Institutions Report reveals non-bank lenders recorded a 7.97% profit drop for the year.
The report doesn't include well-known privately owned non-banks in the NZ mortgage market, such as Resimac and Pepper Money, but includes the likes of Avanti, First Mortgage Trust and First Credit Union.
The finance arms of carmakers BMW, Nissan and Toyota are included in the report.
KPMG's Kensington said the profit drop could be viewed as a "false indicator", as companies with financial years ending earlier this year had made significant provisions for Covid.
The non-banks included in the report recorded a post-tax profit of $299.6 million.
This was "largely attributed to a collective drop in profit of 22.92% between those with balance dates in June and September". Growth in assets rose marginally by 3.95%.
Kensington said the outlook remained strong for non-banks in the mortgage and SME lending space.
"Anecdotally, we hear that they are experiencing growth, as banks have been less aggressive and taking more efforts to lend responsibly.
"Banks aren't going to run the risk of getting into risky loans, and may even have to say no to some loans with a perfectly sensible back story. There will always be unusual deals like that, that can go to the non-banks."
He said ANZ's decision to limit investor lending to 60% LVR would lead to more business for non-banks.
"Somebody that had a 32% deposit before could have walked in and got a loan but they might not be able to do that. That's attractive for non-bank lenders."
In business lending too, non-banks are poised to take more market share, Kensington said, as they are able to do deals without security, and make fast decisions.
"Non-banks are set up to make the business lending decisions. There's no shortage of opportunities coming to non-bank lenders," he said.