Claims by the Opposition banking inquiry that banks have “pocketed two billion dollars” by failing to pass on interest rates have been labeled nonsense by the NZ Bankers’ Association.
 
The Chief Executive of the New Zealand Bankers’ Association Sarah Mehrtens said the combined profits of the four largest banks in 2009 was $1.5 billion so the claim of pocketing $2 billion is clearly extravagant and is without substance. 
 
“On the contrary the Reserve Bank’s financial stability report released yesterday showed that bank profits have fallen and that their margins have been squeezed.
 
“The correct position is set out in the Reserve Banks’ report on pages 27 to 31 and states “’the decline in asset quality, limited balance sheet growth, and upward pressure on the cost of funds have seen a decline in the profitability of the large Australian owned banks. A further softening in profits is likely over the year ahead, given recent weak economic activity.” (page 27)
 
The Reserve Bank describes the competition for retail deposits as “very intense”.
 
“It would be quite wrong for this figure of $2 billion to be accepted as accurate and valid,” Sarah Mehrtens said.

“The findings of this inquiry are in direct conflict with the facts and we don’t accept them as accurate or valid, nor do they reflect the support the banks have given to New Zealand’s economic stability and recovery.”
 
ends