Labour, Reserve Bank speak out on $4.5 billion bank profits

Labour Finance Spokesperson David Cunliffe questioned whether banks are sharing the load of the recession this week, in light of the $4.5 billion profits they made last year. He said the profit margins of the major banks have hardly moved since the recession hit.

“When the New Zealand taxpayer is underwriting banks through extensive guarantees, stimulatory fiscal policy and expansionary monetary policies, as well as over $7 billion in asset underwriting on the Reserve Bank balance sheet, it is high time that New Zealand’s major banks demonstrated a clearer sense of responsibility to this market and their clients,” said Cunliffe.
David Cunliffe questioned the Reserve Bank Deputy Governor Grant Spencer at Select Committee this week following the release of the Financial Stability Report. The Reserve Bank also has had a go at bank profits, expressing disappointment that banks had not dropped mortgage rates further with more people facing loan defaults in the coming year.
Spencer said the while rates had been coming down, the most recent cut to the Official Cash Rate had not flowed through to bank customers and that margins being paid on floating rate mortgages were unusually high.

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