Australian banks’ ‘consistently high’ NZ profits face new inquiry

The profitability of the big four banks’ New Zealand businesses will go under the microscope after the NZ government launched an inquiry into the sector, which is dominated by Australian banks.

Commonwealth Bank, Westpac, National Australia Bank and ANZ Bank also own the four dominant Kiwi banks, and NZ Finance Minister Grant Robertson on Tuesday unveiled a study into competition for personal banking services.

The market study will look at issues including bank profitability, barriers to new market entrants, and consumers’ ability to switch banks. The NZ government said the probe would determine whether any action was needed to bolster competition.

It is the latest sign of regulatory scrutiny of the big four, with the Australian Competition and Consumer Commission also running an inquiry into retail deposits.

Like Australia, NZ’s banking market is dominated by four major players: ANZ, Westpac, the NAB-owned Bank of New Zealand, and CBA-owned ASB Bank. Robertson said the four banks made up about 85 per cent of the market for mortgage and other lending, and held 90 per cent of total bank deposits.

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“The cost-of-living is top of mind for many Kiwis and we need to ensure there’s a competitive market among banks providing personal loans, mortgages, credit cards and other banking services so that people have confidence they are getting the best deal possible when doing their banking,” Robertson said.

“There have been long-standing concerns that the market is not working well for New Zealanders. Banks have consistently made high profits over a number of years and their returns have outperformed their peers in other countries.”

ANZ is the largest bank in New Zealand. It made NZ$842 million ($765 million) in cash profit in the most recent March half.