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Prime Minister Jacinda Ardern has criticised New Zealand’s banks for posting mega-profits during the cost of living crisis, but says the government does not currently have a solution.

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Westpac was the latest bank to announce a strong full-year profit, rising 12 percent to $1.16b. It followed ANZ posting a record-breaking $2.064b profit, with BNZ set to announce its profits on Wednesday.

Meanwhile, New Zealand is grappling with high inflation, and the Reserve Bank has warned some mortgage owners go into negative equity or default on loans.

“What we are seeing currently, I don’t think is justifiable,” Jacinda Ardern said at her weekly post-Cabinet press conference.

“This is not what I would argue is a one-off. We’ve seen this consistently, them posting significant profits. I think questions need to be asked to managers of these banks as to whether or not they are serving their communities well.”

Ardern was repeatedly asked whether the government planned to step in, or whether there were any policies that could make an impact but instead said she was “speaking frankly” on her observations.

“We don’t currently have a policy prescription, and I don’t have a straight off-the-cuff answer to the problem from government. The point I’m making is not all solutions to these questions solely come from government.”

She instead challenged banks to look at their own policies, and reflect on whether they were doing the right thing. She believed banks were well aware New Zealanders were facing increases in the cost of living.

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“The question I would pose to them is they may be operating as other banks are, but are they demonstrating social license?

“Are they demonstrating commitment to the communities they’re serving by taking profits such as those in these current times?”

Ardern also wouldn’t say whether the Commerce Commission would investigate the sector, like it did for supermarkets, fuel, and building supplies.


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On the cost of living, the Prime Minister acknowledged the government’s balance sheets were benefiting from the same forces as banks, such as additional tax revenue, but it was using its social license to support New Zealanders through things like the Family Tax Credit, fuel subsidies, and the extension to free childcare announced at the weekend.