Two other important points made in the bank's submission to the banking market study
ANZ NZ Bank has highlighted that the banking sector for personal banking remained competitive, that the bank’s profits were not excessive, and that the regulatory environment is central to understanding and assessing competition to supply personal banking services.
These three points were accentuated in the major bank’s submission to the Commerce Commission published in the competition watchdog’s market study preliminary issues paper.
“With cost-of-living pressures impacting many households, it is important people have confidence in the banking sector,” ANZ NZ CEO Antonia Watson (pictured above) said. “The market study is an opportunity for us to provide facts about competition in personal banking.”
In a media statement, Watson said that there is already strong competition in personal banking in New Zealand.
“As an example, 20% of the market’s new home loan commitments in July 2023 were switches from another provider,” she said.
ANZ NZ’s response to the preliminary issues paper was backed by research from economic firm Incenta, which “provided evidence that ANZ’s profits – and the profits of New Zealand Banks generally – are at a level that is consistent with a competitive banking market and in line with profits earned by comparable international peers.”
Company profitability is usually measured by looking at the return on the equity, or ROE, they use. According to the KPMG 2022 Financial Institutions Performance Survey, the average ROE for Kiwi banks was 13.4%. In comparison, the average ROE of NZX-50 index companies was 15%.
Watson said it was also important to recognise how regulation and the broader economic environment is shaping competition and personal banking outcomes.
“Our regulatory environment is set up to ensure that personal banking services are secure and reliable – and that has allowed New Zealand to have a resilient banking environment,” she said. “But sometimes that same regulation can affect which providers are able to provide personal banking services or can make it difficult for customers to switch providers.
“Regulation can impact competition in other ways. For example, loan-to-value ratio (LVR) restrictions reduce the risk of impacts if there is a sharp change in house prices, but they also restrict the supply of loans to certain customers.”
Watson said the bank looks forward to working with the commission to ensure competition can continue to thrive in New Zealand’s banking sector.
Download and read ANZ NZ’s full submission and the Incenta report benchmarking the profitability of New Zealand banks.
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