13 May 2009 Media Statement

$4.5B profits: Are the Aussie banks sharing the load?

Labour Finance spokesperson David Cunliffe today questioned whether New Zealand’s Australian owned major retail banks are sharing the load of the economic downturn in light of the $4.5 billion dollars in profits they made last year.

David Cunliffe questioned the Reserve Bank Deputy Governor Grant Spencer at today’s Finance and Electoral Select Committee following the release of the Financial Stability Report today.

David Cunliffe said the profit margins of the major banks have hardly moved since the recession hit with a nominal decrease of 7% after tax significantly driven by voluntary provision for bad debt.

“At the same time, some banks, according the to the RBNZ have not been passing on the cut to the official cash rate at all, leaving hardworking Kiwi families to bear the whole load, while billions of dollars of profits are being made,” David Cunliffe said

“The real economy in New Zealand is under pressure, according to the Reserve Bank, with impaired assets rising especially in the property sector and some parts of the agricultural sector.

“Of even more concern to the Reserve Bank is terms of access to credit for New Zealand businesses, which the central bank said it was monitoring closely.

“When the New Zealand taxpayer is underwriting banks through extensive guarantees, stimulatory fiscal policy and expansionary monetary policies, as well as over $7 billion in asset underwriting on the Reserve Bank balance sheet, it is high time that New Zealand’s major banks demonstrated a clearer sense of responsibility to this market and their clients.

“When will the major Banks show they are appropriately sharing the load," David Cunliffe said.

ENDS

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