Record, excessive profits in the banking industry and the high level of foreign ownership of the banking sector is causing long-term damage to the economy, the Green Party said today.
KPMG's latest Financial Institutions Performance Survey found New Zealand's banks posted record collective profits up 6.9 percent to reach an all-time high of $5.17 billion last year. Interest margins are also at ten-year highs at 2.28 percent.
“The fact that over 90 percent of our banking sector is foreign-owned means that most of those billions of dollars of record profits are flowing offshore, contributing to our number one economic problem – a high and persistent current account deficit,” said Green Party finance spokesperson Julie Anne Genter.
“Four massive Australian banks continue to dominate our banking industry and are among the most profitable banks in the developed world.
“Record profitability comes at the cost of New Zealand businesses and households that are paying higher borrowing costs and bank fees than is reasonable.
“Banking is yet another sector where Government inaction favours big foreign companies over our own.”
The Green Party has issued a challenge to the National Government to increase competition in our banking sector by strengthening Kiwibank and other New Zealand-owned banks and credit unions.
“A strong Kiwibank is an integral part of a smart, green economy,” Ms Genter said.
“By injecting capital into Kiwibank and allowing it, in time, to become the Government’s banker, we can increase its capacity to compete fairly with the much bigger Australian banks.
“It’s time the Government built up our New Zealand-owned banks and credit unions rather than let our foreign-owned banks strip our economy of capital.”