New Zealand’s four Australian-owned banks earned more last year than every other large company in the country combined. Here’s what that means for you.
Start with the Numbers
ANZ, ASB, BNZ and Westpac — the four Australian-owned banks that dominate New Zealand’s financial system — earned a combined $6.5 billion in after-tax profit in 2024, with the broader banking sector reaching a record $7.22 billion across all registered banks. In 2025, profits climbed further.
The scale is striking. ANZ alone earned $2.369 billion in after-tax profit in 2025 — nearly twice the profit of Fonterra, New Zealand’s largest non-bank company. ASB on its own earned more than Auckland Airport, Lotto, and Fisher & Paykel Healthcare combined.
To match the Big Four’s combined profit using the rest of New Zealand’s large companies, you’d need to add up Fonterra, Kaingaroa Timberlands, Auckland Airport, Lotto, Mainfreight, Fisher & Paykel Healthcare, Spark, Contact Energy, Meridian, Infratil, Air New Zealand and The Warehouse Group — and you’d still fall short.
Almost all of that profit leaves New Zealand. These are Australian companies. The dividends flow to Melbourne and Sydney.
Are They Charging Too Much?
That’s the question the Commerce Commission asked in its landmark 2024 personal banking market study — a 14-month investigation that confirmed what most New Zealanders already suspected. The short answer is yes. The longer answer: the system is designed to make it easy for them to.
The Commission found the four big banks do not face strong competition. They collectively hold around 90% of the market. Switching banks is harder than it should be, smaller competitors struggle to gain traction, and consumers — despite being broadly satisfied with service — are not getting the prices a genuinely competitive market would deliver.
The net interest margin — the gap between what banks pay depositors and what they charge borrowers — tells the story clearly. New Zealand’s Big Four run margins of roughly 2.3% to 2.5%. UK major banks sit around 1.5% to 1.7%. Canadian banks around 1.6% to 1.8%. European banks average 0.9% to 1.3%.
On every $100 lent out, our banks pocket roughly a dollar more than comparable banks in other wealthy countries. Across hundreds of billions in lending, that adds up fast.
Return on equity reinforces the picture. In the most recent comparison period, every Big Four New Zealand subsidiary earned a higher return than its own Australian parent. The Commerce Commission found New Zealand Big Four returns sit persistently in the top quartile of comparable developed-country banks — not as a one-off, but year after year.
If New Zealand bank returns were brought down to the level of their Australian parents — itself not a low bar — combined profits would fall by an estimated $1.5 to $2 billion per year. That’s the rough scale of what a more competitive market could return to New Zealand households and businesses.
What About Rate Cuts?
This matters to anyone with a mortgage. When the Reserve Bank cuts the Official Cash Rate, how quickly does your bank pass it on?
The evidence is not flattering for the majors. Smaller New Zealand-owned lenders — including SBS Bank — have consistently offered lower mortgage rates while the big four lagged. Critics argue the banks use the gap between OCR cuts and lending rate reductions to pad margins, and the profit data supports that view.
Westpac recorded a 13% profit increase in 2025, to $1.197 billion — even as the OCR was falling and borrowers expected relief. ANZ also recorded higher profits that year.
What Does This Mean for Rural Businesses?
If you’re running a dairy, sheep, beef or mixed farming operation, the bank isn’t just your lender — it’s one of your biggest costs. Farm debt in New Zealand runs into the tens of billions. The interest rate you’re paying, the fees on your business accounts, the terms on your seasonal finance — all of it sits within a market the Commerce Commission has formally declared lacks real competition.
Federated Farmers raised exactly this point during the banking market study, calling for assurances that rural banking is operating fairly. And the reality is that farming businesses have fewer options than urban borrowers — rural lending is specialist territory, and the big four know it.
That doesn’t mean you’re helpless. A few things worth considering:
- Shop your lending. Kiwibank, Rabobank and some specialist lenders are genuinely competing for rural customers. Get comparative quotes — even if you stay put, the exercise gives you leverage.
- Review your account structure. Fees on everyday business accounts add up. The Commerce Commission specifically recommended a review of fees on these accounts — there is room to negotiate.
- Understand your margin. Know what interest rate your bank earns on your debt versus what it pays on deposits. It’s publicly available data — use it.
- Talk to your accountant. Structuring your debt, timing your facilities, and managing your banking relationships strategically can make a real difference to what the bank actually costs you each year.
Is Anything Being Done?
The Commerce Commission made 14 recommendations following its market study, and the Government committed to acting on all of them urgently. A Finance and Expenditure Committee inquiry followed, gathering submissions from 148 parties.
The focus is on making switching easier, opening the payments system to more competition, reducing regulatory barriers for smaller lenders, and fast-tracking open banking so fintechs can compete more effectively. These are medium-term solutions — they won’t change your mortgage rate next year. But the direction is right, and political pressure on banks to demonstrate fair treatment of customers — particularly rural and regional ones — is higher than it has been in a long time.
The Bottom Line
New Zealand’s big four banks are extraordinarily profitable — not by accident, but because they operate in a market with limited competition and high barriers to switching. The Commerce Commission has confirmed it. The data is unambiguous.
None of this means your bank is your enemy. They provide essential services, employ thousands of New Zealanders, and fund a significant share of the country’s productive economy. But understanding how the game is structured helps you play it better.