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Big 4 NZ banks more profitable than counterparts from major developed countries on a pre-tax basis, again

Big 4 NZ banks more profitable than counterparts from major developed countries on a pre-tax basis, again

By Gareth Vaughan

New Zealand's big four banks remain more profitable than banks from 11 other OECD countries, based on number crunching by and an international bank profitability comparison done by the Bank for International Settlements (BIS).

It's the third consecutive year has added the big four New Zealand banks to the table compiled by BIS in its annual report, and the third straight year New Zealand's ANZ, ASB, BNZ and Westpac have come out ahead of major banks in other developed countries in terms of pre-tax profit as a percentage of total assets.

 For the last two years BIS has included banks from Brazil, China, India and Russia, the so-called "BRIC" economies where the state plays a major role in bank ownership, in its table. With them included, adding New Zealand to the BIS list has our big four third equal - with Brazil's big three banks - out of banks from 16 countries at 1.62%. That's well up from 1.29% last year, and 1.39% in 2012.

Ahead of New Zealand is only Russia's big three banks at 2.04%, and China's big four at 1.86%. The Australian parents of New Zealand's big four came in at 1.28%, placing them sixth behind India's big three banks at 1.41%. For the Aussie banks that's up from 1.18% last year and 1.19% in 2012.

BIS, the central banks' bank, also measures net interest margins, loan loss provisions and operating costs.

Throwing New Zealand's big four into the mix once again, they're seventh in terms of net interest margins at 2.27%, up from 2.25% last year but down from 2.37% in 2012. Australia comes in eighth at 1.79%. That's down from 1.82% last year and 1.83% the year before.

In loan loss provisions, New Zealand comes in fourth at 0.09%, down from 0.14% last year and 0.15% in 2012. Australia's fifth equal with Canada at 0.17%, down from 0.21% last year and 0.19% in 2012.

And in terms of operating costs, this is the only category where the New Zealand big four trail their Aussie parents. New Zealand ranks sixth at 1.21%. That shows a steadiness over the three years given last year's result was 1.20% and 2012's 1.21%. However the Aussie parents placed fourth at 1.11%, which is down on 1.19% in 2013 and 1.17% in 2012's survey.

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Of course their profits are higher that everywhere else , and we individuals are basically excluded from sharing in this windfall  (other than the IRD )

1) We are too generous with Banks provisions for Bad Debt in our Tax system, thus enabling some really creative Tax accounting  

2) Their margins are HUG.......... deposits pay 2 to 4% , while overdrafts and vehicle finance are charged as high as 15%

3) The most profiatable is Credit cards and personal loans  , which cost about 4% to administer and fund , and the customer pays as much as 19%

Lets face it , a Banking Licence is currently the most profitable business licence to hold  in the whole of NZ .

What really irks me is that their shares are not parallel listed on the NZX and ASX , so we are excluded from direct ownership under the PIE


G.E.Finance will be happy.They have just announced a 70million dollar profit.Must be all those people at Countdown using their card to buy groceries.MMMM food on cards what could go wrong?


Good to see banks are so profitable relative to other countries. It means our deposits are safe and money is readily available to people who want to borrow.


With covered bonds and other forms of rear guard action, I somehow doubt it.  I do often wonder how far the tide would have to recede to expose the OBR.