Submission to Multi-Party Inquiry
into Banking by interest.co.nz
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Why the problem is not bank profiteering.
The problem is New Zealand’s structural settings favouring
housing investment.
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Who are we to say this?
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
NZers care an awful lot about interest rates
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Obviously banks are profiteering…right?
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
That’s a big gap. They must be creaming it.
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Wholesale funding costs are up 100 bps
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Local funding costs are up 150 basis points
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Bank net interest margins actually fellBank Net Interest
Margin 09 Net Interest Margin 08
Profit2009NZ$mln
Profit2008NZ$mln
Profit / assets2009
Profit/assets2008
ANZ National
2.19% 2.45% 561 960 0.6% 1.1%
BNZ 2.20% 2.25% -183 597 0.01% 1.35%
ASB 1.78% 1.82% 336 432 0.7% 1.0%Westpac 1.97% 2.13% 186 462 0.5% 1.2%Kiwibank 1.90% 1.90% 52.5 36.8 0.6% 0.6%
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
And they’ve been falling for a long while
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
The bias to farm and housing lending
worsened in 2009Loans 2009
$bln2008$bln
Change$bln
2009Rate %
2008Rate %
Changebps
Homes 164.8 161.6 +3.2 6.4 10.9 -450
Farms 46.6 43.5 +3.1 9.9 12.2 -230
Business
78.0 81.0 -3.0 9.9 12.2 -230
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
And the connection is a foreign debt blowout
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Who in this room has an LAQC or family trust?
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Ever wonder what a loss of sovereignty
might look like
?
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Reserve Bank Governor
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Bank regulator
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Currency
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
So what do we do?• Flatter, simpler tax system• More productive investment• Less property speculation• Land tax or Capital Gains Tax• GST on mortgages/rents?• Use capital adequacy rules• Bigger capital ‘top-ups’
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
And give this man a knighthood
Parliamentary Banking Inquiry- Wellington - Sept 2, 2009
Thank you for your time