One of New Zealand's biggest banks has posted a massive profit to the tune of nearly $2 billion dollars, up 44% year on year.
ANZ said it was driven by record demand in the housing market combined with a stronger than ever economy.
Economist Bernard Hickey says the massive profit highlights the major reliance on the housing as an investment for Kiwis, adding that it's resulted in a "housing market with bits tacked on".
He told Breakfast that ANZ's lending in the last financial quarter was made up of roughly 70 per cent of lending dedicated for housing loans.
"We really don't have an economy, we've got a housing market with bits tacked on... everywhere we look it seems to always be about housing and it is the same with this banking story.
"This is a reflection of a housing economy because we are so dominated by our housing sector in how the economy rises."
Hickey says the banking system along with the Government and the Reserve Bank turned to the housing market to prevent the economy from suffering as a result of Covid-19.
He said the market was used as a "wealth tool" to further stablise New Zealand's economy last year, resulting in a win for big banks.
"The Government, the Reserve Bank and the banking system have used the housing market as a wealth tool to pump up the economy," Hickey said.
"An inevitable result of that is huge profits for the banks."
Hickey estimates New Zealand's four main Australian-owned banks reported a joint profit upwards of $60 billion as a result of the booming housing market.
ANZ, ASB, BNZ, and Westpac make up roughly 85 per cent of all bank lending according to the Reserve Bank, compared to just nine per cent that New Zealand-owned banks account for.
"That's about two per cent of GDP, that's a really big chunk – much bigger than in other countries."
One commentator says the bank is making three times as much as all supermarkets combined, warranting a Government inquiry. (Source: Other)
ANZ's massive profit has prompted calls by some for a review into the banking sector , something which Hickey says he'd support.
Hickey says there's "a good case" for the sector to follow in the footsteps of the oil industry and supermarkets that have already been put under the microscope by the Commerce Commission.
"I think there's a good case for the banking system to be next on the ranks for a market study."
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