Point of Order: ANZ (while chalking up a $2bn net profit) says it is helping build future prosperity and security for Aotearoa

Australian banks aren’t popular in NZ, right?

They make huge profits, then ship the booty back to the greedy shareholders across the ditch.

That’s the refrain from many straitened Kiwis who nevertheless are disinclined to switch to using NZ-owned banks.

There are other New Zealanders who find the services of Australian banks quite satisfactory, and see the scale of their businesses as a reassuring haven for their savings.

This week ANZ New Zealand cracked the $2 billion mark in net profit for the first time.

Chief Executive Antonia Watson said the 8% increase in profit was a result of a combination of pent-up post-pandemic economic activity and a buoyant housing market.

Certainly it’s a good result, attesting to a satisfactory year.

Watson said:

“Coming into the 2021-2022 financial year we didn’t anticipate the NZ economy would hold up as well as it has. While inflation and supply chain problems, particularly for importers and exporters, were an issue for many customers throughout the year the desire to get back to some kind of normal kept consumer spending up”.

The housing market had quietened significantly in recent months, following four Official Cash Rate (OCR) rises since May, she said. But it was strong for most of the financial year. Home lending increased $5.3 bn to $104 bn over the 12 months to 30 September 2022.

Business and Institutional customers continued to manage well despite many facing challenges throughout the year, including cost inflation, supply chain difficulties, and finding staff.

Non-housing lending to Business and Institutional customers — including the agricultural sector — remained muted, increasing by $700m.

The Reserve Bank of NZ’s new capital rules equate to an increase in minimum regulatory capital required of $2.2bn over the course of the year , and will require ongoing regulatory capital uplift until 2028.

“Banks are a reflection of the economies they operate in, and NZ has been far more resilient than expected,” Watson said.

Many customers have taken the opportunity to pay down debt and increase their savings. This caution, she says, is wise given the dark clouds on the horizon.

“Inflation is stubbornly high and that will mean higher costs of living and higher interest rates for longer. Global growth and geopolitical issues outside New Zealand’s control could also severely impact the country in 2023.

“The uncertain environment means New Zealanders need to be cautious.”

That was the main reason for ANZ NZ increasing its credit impairment provisions to $751m, with a $39m charge recognised for FY22.

Watson said ANZ NZ in recent months had set up a team to closely monitor customers for signs they might be concerned about managing their finances or coming under financial pressure as interest rates rise and the economy slows. It had also bolstered the bank’s Customer Financial Wellbeing team and was proactively reaching out to those who showed signs of needing reassurance and support.

“At the moment, the vast majority of customers are in a sound financial position but we know that many will roll off fixed home loans onto higher rates over the coming year. When that happens some will be under financial pressure.”

She said it wasn’t in anyone’s interests for people to get into financial stress.

“That’s why we’re keen to talk with customers sooner rather than later if there are any signs of problems to see if, for example, we can structure their finances differently to relieve some pressure.”

She said ANZ had been in the country in one form or another since 1840 and was committed to supporting New Zealanders through any tough times ahead.

“We’re in a strong position to support our customers through times of economic uncertainty and to help build future prosperity and security for Aotearoa.”.

That final sentence has something of a Sir John Key ring to it.

In any case, the banking industry has to be commended for what it achieves.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton