Dame Therese Walsh said ASB's return on equity was about 12.5 percent and that was in line with what large local companies were making. Photo: RNZ / Nate McKinnon
ASB has defended its billion-dollar profits to a parliamentary committee, but says it is worried about the impact of big overseas technology on the sector.
ASB chairperson Dame Therese Walsh told the Finance and Expenditure Committee inquiry into banking its $1.4 billion profit last year was not excessive and was necessary for the bank and its customers.
"Our level of profitability is commensurate with the investment of our shareholders, and also the level of return is appropriate to ensure we can keep operating as a very safe and secure and stable bank.
"Profitability is really important about attracting international funding - we need funding from offshore to fund New Zealand businesses and personal customers, and without that we can't pass on the benefits to New Zealanders."
Walsh said ASB's return on equity was about 12.5 percent and that was in line with what large local companies were making.
The explanation was similar to that given by ANZ two weeks ago, and has been the standard industry response for some time to criticisms the sector is profiteering.
Walsh said about half the profit went to its parent, Australia's Commonwealth Bank, with the rest retained for local systems and products development and to fund local lending.
She and the bank's chief executive, Vittoria Shortt, highlighted that open banking - through which third party financial concerns could link to bank systems to directly offer products and services - would have a significant impact on the sector and competition.
The pair highlighted the growing fragmentation in the sector, with companies specialising in distinct business types such as payments, rural lending or consumer finance.
Walsh doubted the entry of a new full service banking and finance competitor.
"The biggest of all is yet to come. If you look around the world, it is big tech that is coming in and fundamentally changing banking."
Walsh said the regulators would need to make sure the same rules applied to all in equal fashion.
"We are concerned that … these new entrants will come in and only be interested in the profit pool they perceive as favourable and not deliver all the banking services to all New Zealanders."
Walsh said unless there was a level playing field, the big tech concerns would not "fully participate in New Zealand society, pay taxes, employ people, meet the rules and regulations".
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