ANZ says Kiwibank is grabbing 25% of home and business loans

Appearing before Parliament's finance and expenditure's inquiry into banking, ANZ NZ chief executive Antonia Watson took issue with the market being characterised as having little or no competion.

“Our market does not have little or no competition,” Watson said.

Kiwibank is “winning 25% of home loans and business banking at the moment. That is significant competition.”

Watson also brushed off the suggestion that, as NZ's largest bank, ANZ hasn't been playing its part in supporting the productive part of the economy.

“We are absolutely playing our part in supporting the productive part of the economy,” she said, adding that 51% of her bank's capital is backing agricultural and business lending and that 42% is backing housing loans.

However, because much less capital is required to back home loans, excluding its institutional bank, more than 80% of ANZs lending is on home loans and it has been growing strongly for a number of years.

Watson had said earlier that the reason why ANZ had been so profitable throughout the entire period of the pandemic came down to “just a timing issue” with fixed rate deposits and loans taking time to reprice.

One reason why deposit rates were so low through the pandemic was because “there was a lot of money in the system because we had been printing money,” Watson said, referring to the Reserve Bank's large scale asset programme (LSAP), which pumped about $55 billion into the economy and is likely to have cost the government about $11 billion.

Watson said the NZ bank pays more for its funding than its Australian parent because NZ is perceived to be a riskier country to invest in.

Committee chair Stuart Smith made it clear that, based on the Commerce Commission's work, he doesn't  believe ANZ Bank New Zealand's assertion that its return on equity is at or slightly above its cost of capital.

ANZ NZ Chair Scott St John wasn't exactly helpful to the impression Watson was trying to create when he said: “We do not aspire to be average.”

Smith wound up the session by bringing up Watson's recent public statements in favour of NZ introducing a capital gains tax, and suggesting that a tax on excess banking profits would collect more tax more efficiently.

“Our submission has made it very clear that we don't make excessive profits,” Watson said.

Smith said: “I know that's your answer,” but that the commission's report had contradicted that assertion. “I don't accept that answer.”