New Zealand First leader Winston Peters ripped into foreign-owned banks yesterday, accusing them of "snatching obscene profits" from the New Zealand economy.
"This is further proof the Government must use New Zealand-owned banks for all Crown and local government banking," he said.
Mr Peters was commenting on the latest KPMG quarterly financial institutions performance survey which showed New Zealand's banking sector reporting profits of $914 million in the June quarter.
KPMG head of financial services John Kensington lauded the news.
"Healthy bank profits should be seen as a good news story and positive for New Zealand's economy as a whole."
However, Mr Peters saw it differently. Bank profits, with the larger banks being Australian-owned, were up 45% over the previous quarter.
"Hundreds of millions of dollars in bank profits, along with 54,000 talented job-seeking Kiwis, are heading to Australia every year.
"What we have here is a siphoning of our wealth out of the country and National is doing nothing about it," he said.
Mr Kensington said it was not only the banks that had been recording good profits.
The actual returns achieved by the banking sector were lower than those achieved by some other key players in the New Zealand economy.
An average sample from June 30 annual results of New Zealand-listed corporations showed a return on net assets of 9.57%. That compared with 3.5% for the banking sector.
"We shouldn't forget that New Zealand's banking sector weathered the storm of the Global Financial Crisis and provided support to the economy in that troubled time."
About $6.5 billion of capital was injected into the local banking sector during the GFC, he said.
Europe and the United States provided clear illustrations of what could happen when banks failed. In 2009, the United Kingdom government support for British Banks had reached 850 billion ($NZ1.7 trillion).
The after-effects of European austerity measures had yet to be fully felt, Mr Kensington said. Further loss of confidence, tightening debt markets, and slowing of the Chinese and Australian economies could have knock-on effects for New Zealand.
"Kiwi banks with strong balance sheets will help our economy weather any potential storm. A weak banking sector in times of crisis causes strain on the economy and, as shown by the UK bail-out figures, a potential cost to taxpayers."
Financial results aside, New Zealand's banking sector provided other positive influences in the lives of Kiwis, he said.
The sector employed about 26,000 New Zealanders and those employees paid a "significant" amount of tax and spent their earnings in local economies.
Also, banks paid millions of dollars annually to their New Zealand suppliers.
In the last financial year the sector paid more than $4.4 billion to suppliers.
In August, New Zealand banks registered nearly 1.4 million individual mortgages on their balance sheets, Mr Kensington said.
"Taking all these factors into account, it is important that we do not forget the benefits of having a profitable banking sector.
"If this were not the case, the day-to-day lives of mum and dad New Zealanders would be different," he said.
