Ryan Bridge: Kiwibank's result proves there is competition for banks

There's a lot of noise around banks in this country, but results speak for themselves.  

If I had a dollar for every time a politician said there's no competition in the banking sector, that they're price-gouging tyrants, I'd be richer than Elon Musk and Jeff Bezos put together.  

But let's take a closer look, shall we?  

Kiwibank reported annual profit was down 9% yesterday. 

Why? Their interest margins were down. That's the difference between the revenue they make from charging us interest on loans and the cost of paying us interest on our savings.  

Why did this happen?  

According to the CEO, in part, competition. 

Steve Jurkovich told interest.co.nz that ANZ was aggressively offering cashbacks of up to 1.5% to steal customers.  

He said, quote, "that was very competitive".  

What that means for us, customers, is that banks are fighting for our business. Aggressively. It means we get deals and cashback and more competitive rates.  

Does this sound like a Sicilian mafia, a cartel, an oligopoly on steroids? No.  

What it tells you is that there is competition. We have 27 registered banks in this country to choose from.  

There is a but – the big four are Aussie-owned and control 80-odd percent of the market.  

They have access to more capital, deeper pockets, and can steam-roll challengers.  

So how do we solve that problem? Winston says re-nationalise BNZ, which is the nuclear option the state can't afford.  

The answer lies, again in the results, which show Kiwibank is forgoing margins to grow share. Its home loan market was up from 8% to 11% on last year.  

It's benefiting from changes to capital requirements and a capital raise.  

Next will, surely, come mergers. TSB anyone?  

The other thing it could use, of course, is more customers.  

And that choice, that power, is on our hands, should we choose to use it. 

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