final rabo plus financial confidence index (media pack)

Submission to Multi-Party Inquiry

into Banking by interest.co.nz

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.


Who are we to say this?


NZers care an awful lot about interest rates


Obviously banks are profiteering…right?


That’s a big gap. They must be creaming it.


Wholesale funding costs are up 100 bps


Local funding costs are up 150 basis points


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%


And they’ve been falling for a long while


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


And the connection is a foreign debt blowout


Who in this room has an LAQC or family trust?


Ever wonder what a loss of sovereignty

might look like

?


Reserve Bank Governor


Bank regulator


Currency


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’


And give this man a knighthood


Thank you for your time

final rabo plus financial confidence index (media pack)

Economy & Finance

party inquiry

bank net

capital gains tax

housing investment

land tax

wholesale funding costs

local funding costs

simpler tax system