Calls for review of banking system after ANZ records huge profit

Source: 1News

A $1.92 billion profit by New Zealand’s biggest bank, ANZ, has prompted calls for a review of the banking system.

The profit is up 44 per cent on last year, fuelled by a surge in lending to homeowners amid a hot market.

The bank’s chief executive, Antonia Watson, said the profit is nearly back to pre-Covid levels after a big dip last year.

The result is not a record high, that was in 2019, but it is still shocking to Sam Stubbs, who is the managing director of the non-profit Kiwisaver fund, Simplicity.

“Here’s a company that’s chosen to make, in a year, about three times as much as all the supermarkets in the country put together, so that’s about over $380 per a New Zealander in profit,” said Stubbs.

The move comes as more of its staff continue to work from home.

But a Massey University professor specialising in banking David Tripe saw the profit more positively. “It is a reflection of our economy, it’s things didn’t turn out as bad as we initially expected them to be,” he said.

ANZ rejects the comparison to supermarkets, saying its asset base at $18 billion is much bigger. But supermarket profits were recently scrutinised by the Commerce Commission, and there are calls for the four Australian-owned banks to face that too.

“These are some of the most profitable banks in the world, making some of the highest margins off New Zealanders and they've done it for decades and the Government has never had the kahunas to get together and run a commission of inquiry as to why they are so profitable,” said Stubbs.

Finance Minister Grant Robertson said a “close eye” is being kept on what’s happening in banking.

Another criticism of ANZ is that it’s cut lending to business and farms, and instead poured money into housing. But the bank refutes any suggestion it has inflated the market.

“Businesses are still a bit nervous about Covid, we haven't really seen the demand for business lending whereas on the housing side we had this long-term supply and demand issue that is still playing out,” said Watson.

Tripe said while bank is making more money on lending, it couldn’t be solely blamed for heating up the housing market.

“They've been relatively cautious in their lending, but people who have been good credit risks have found it easy to borrow  and that's meant they've ended up lending more,” Tripe said.

The other big banks’ results are due out next week and the forecast is for more profits.