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Speaker 1: It's bank profit watch time. A and Z's up twenty

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Speaker 1: percent two and a half billion. Last week, Westpac thirteen percent,

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Speaker 1: increased to one point one billion. Schama Jakob is Simplicity

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Speaker 1: chief economist with US this morning, Shama.

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Speaker 2: Good morning, good morning.

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Speaker 1: Are you buying the lines that are coming out of

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Speaker 1: Antonio Watson's mouth? Are you buying the lines from the banks.

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Speaker 1: The net interest margin is up well slightly, But when

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Speaker 1: you compare apples with apples with Australia, with their Australia business,

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Speaker 1: actually the difference is explained by capital requirements.

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Speaker 2: Here, not really, because that net interest margin has been

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Speaker 2: higher than Australia for a very long time, and the

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Speaker 2: reason why that's high is because they pairs less on

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Speaker 2: oine deposits and charges more on our mortgages.

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Speaker 1: If you look through the results for A and Z,

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Speaker 1: their cash profits up by four percent, which is the

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Speaker 1: same amount they've grown their balance sheet by.

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Speaker 2: Exactly. So it's very much a story about their net

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Speaker 2: interest margins being pretty much the same, a small increase,

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Speaker 2: but it's really been that modest growth in lending and

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Speaker 2: deposits that's driving their profits.

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Speaker 1: Is there a band thing, Well, the bad.

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Speaker 2: Thing is how much they charge us. So we want

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Speaker 2: our banks to be profitable and safe, but not the

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Speaker 2: charge is an unreasonable amount. That was the reason why

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Speaker 2: we have the hearing that the Nicolobelas started. That's why

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Speaker 2: the Commerce Commission was meant to look at it. We

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Speaker 2: need to get serious about banking competition in New Zealand.

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Speaker 2: The problem for us is that we have a bank

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Speaker 2: banking sector that's extraordinarily safe, extraordinary profitable, not particularly innovative,

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Speaker 2: and we don't get products and services. Why are we

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Speaker 2: paying so much for so little?

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Speaker 1: How much more are we paying than the rest of

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Speaker 1: the world.

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Speaker 2: Much higher and so As you know, when the Commerce

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Speaker 2: Commission did that work, there was quite a lot of

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Speaker 2: argument around those metrics. But the reality is that the

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Speaker 2: New Zealand banking sector is one of the most profitable

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Speaker 2: in the ovciting and it is not one of the

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Speaker 2: most innovative. And the reality is that if we want

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Speaker 2: to if you are to pay higher prices, we should

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Speaker 2: get something in return for it, and we are not.

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Speaker 2: So we need to get serious about having much sharper teeth.

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Speaker 2: As the next inquiry of the banking sector, the current

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Speaker 2: one is not doing enough.

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Speaker 1: Everyone goes on about competition. We've got twenty seven registered

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Speaker 1: banks in New Zealand. How many would make good competition.

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Speaker 2: Well, it's not the apples for apples, because when you

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Speaker 2: look at building societies and others, those banks are regulated

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Speaker 2: very differently. They have very small bound sheets and they're

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Speaker 2: not particularly well performing. So we do need to have

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Speaker 2: the kinds of fintech tyche companies that are being real

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Speaker 2: challenges in Europe in particular. I think that's the kind

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Speaker 2: of competition we need to see in quite a big

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Speaker 2: way in New Zealand. We've got the beginnings of that

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Speaker 2: with things like open banking. That's only the beginning and

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Speaker 2: we need to really push ahead on that because clearly

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Speaker 2: New Zealand is a sector where financial services can do

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Speaker 2: very well. Why should not New Zealanders also receive good

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Speaker 2: products and services at the same.

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Speaker 1: Time, Shamu was interesting. Appreciate your time, Shammo bon Jakop

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Speaker 1: Simplicity Chief Economists.

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Speaker 2: For more from early edition with Ryan Bridge.

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