An analysis of the net interest margins of ANZ National, ASB, BNZ, Westpac and Kiwibank shows they have collectively been squeezed around 10-15 basis points lower to around 215 basis points by the end of September, appearing to contradict Reserve Bank Governor Alan Bollard's comments this month that the banks had been increasing their profit margins recently.

The analysis by the New Zealand Bankers Association from the banks General Disclosure Statements (GDS) and an estimate of Westpac's figure showed the average net interest margin had been falling for the last 3 years from 250 basis points to around 215 basis points by the end of the September quarter this year.

The funding costs of the big four Australian owned banks have jumped in 2008 as it became more expensive to roll over wholesale foreign debt and as competition for retail deposits at home has heated up.

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