Market study into banks on cards as Govt faces pressure to investigate eyewatering profits

Banks are back under the microscope as the Government faces mounting pressure to investigate their eyewatering profits.

The Prime Minister has confirmed a market study is being currently considered.

Money, money, money, it's always sunny in the bankers' world - and that's become a bit of a problem.

How much money do banks make in profit? 

Last year, before tax, banks made $10.2 billion. That equates to $197 million a week, $28 million a day, or roughly $1.1 million in profit every hour. 

"They've certainly made some very handsome profits in the last little while," said Prime Minister Chris Hipkins. 

It's not just in the last little while. This graph shows banks before-tax profits over the last decade.

Market study into banks on cards as Govt faces pressure to investigate eyewatering profits
Photo credit: Newshub.

In the last quarter alone they made $2.6 billion. 

National wants an inquiry led by politicians

"This will be quick, this will be sharp and I think that's what New Zealanders want," said National finance spokesperson Nicola Willis.

"I think when even the National Party are waking up to the absurd profits Australian banks are making while low-income New Zealanders are struggling, it's time for an excess profits tax," said Green Party revenue spokesperson Chlöe Swarbrick.

But Sam Stubbs, the managing director at Simplicity, said: "Here's the risk with politicians - you have an ex-politician who's the chairman of our biggest bank".

That's not just any ex-politician, but an ex-Prime Minister: Sir John Key, chair of ANZ.

There are calls for an independent full-blown market study a la petrol, supermarkets and building supplies.

"You have to look at the most profitable industry in the country right? Let me give you an example, the four most profitable companies in the country are the four big banks," said Stubbs.

A market study is exactly what's on the table for the banks.

"It would actually put some objective, rather than some political commentary around that and give us a base for us to make good evidence-based decisions," said Hipkins. 

Tex Edwards, the founder of 2Degrees, said there is "not enough competition" and "the ease in which they can switch banks is too hard".

There is something coming two years down the track with open bank which would make it easier, it's called bank account portability.

Edwards said do it now.

"Most Kiwis understand how mobile phone portability works, you can change your mobile phone provider without having to change your number."

Commerce and Consumer Affairs Minister Dr Duncan Webb said: "If we want to look at all the different levers that are out there, market studies are one possibility."

Tick-tock, the time to strike is when the public outrage is hot.