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Am I changing my mind on banks?

I have defended banks.

I have defended them when Adrian Orr was wandering around talking about stress tests and making them put aside more money to cover a rainy day and catastrophe.

This, you might remember, against a track record of plenty of profit and success.

We have not seen the issues some have seen offshore. Banks in this part of the world have been wonderfully robust and performed well during the Global Financial Crisis and Covid.

In fact ASB, as if to prove it, yesterday announced another record profit - $1.56b in profit.

But, it\'s been done in a cost-of-living crisis where, apparently, there are thousands of people up against a mortgage cliff as money has gone from 2% to over 8%, and maybe even higher if the Reserve Bank isn\'t finished with its inflation-busting cash rate experiment.

Anyway, here is my problem. Part of me argues you are not forced to do business with one particular bank, there is plenty of competition if you look at rates with both deposit and lending variety to choose from.

For all those that run the tired, old line about hating the big Australia banks, there are local alternatives. Kiwibank was designed to be a disruptor but has never really taken off. They got a $225mil deposit the other day in order to boost their lending profile.

So, we have choice.

ASB\'s profit came from more lending for houses, which is good. We want house sales. The profit came from more business lending. Good, we want business borrowing to expand. The profit came from more deposits. Good, we want people saving and, currently, saving in a bank is moderately attractive.

But, and this is the other hand, it came from increased margin. The net interest margin increased, again, by 22 basis points to 244 basis points.

Now, this is where it gets tricky. Do we like a profit? Yes we do.

Do we like feeling ripped off? No, we don\\u2019t.

Where does a bank\'s social licence fit in here? When, as so many struggle, does it start to look a bit ordinary that one bank is pulling $1.5b off us in profit.

And when all the banks roughly do the same, how much profit is that?

Should they be doing more than extracting cash for shareholders, or have we enabled them to do it because we willingly do business with them?

The Commerce Commission\'s current market study into banking, of all the studies they have done, will be by far the most interesting conclusion. The other results into building and supermarkets ave been a bit bland.

I\'m not sure this one will let the industry off as lightly. And I\'m not sure they deserve to be let off lightly.

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