In a B2B News online reader poll, 46 of 51 voters, or 90.2%, agreed that banks have had it too easy for too long. It’s an unscientific poll. But the question behind it has had two official inquiries since 2023.
The Commerce Commission, the competition regulator, spent 14 months on a market study of personal banking. Its final report in August 2024 found “a stable, highly profitable, two-tier oligopoly with no disruptive maverick”. It made 14 recommendations, including more capital for Kiwibank and open banking fully running by June 2026.
The profits are real. KPMG’s July 2026 review of the banking sector puts net profit after tax at $7.7 billion in 2025, up from $6.2 billion in 2021. KPMG says profitability remains robust, but margins are normalising and operating costs keep climbing.
What has changed since the reports
A year on, the Commission told ministers it had seen progress on all its recommendations. Payments NZ, the industry-owned payments body, launched a bank switching website in June 2025. The New Zealand Banking Association (NZBA), the banks’ industry body, built a home loan comparison calculator, and ANZ had fully pro-rated its clawbacks on cash contributions and adviser commissions.
The Commission also said more work was needed on open banking and home loan competition, and that industry had made only minimal progress on shared accreditation rules. Regulated open banking started on 1 December 2025. Payments NZ told MPs there were more than 362,000 open banking payments in June 2026, worth over $100 million.
Parliament’s Finance and Expenditure Committee ran its own inquiry with the Primary Production Committee, adding business and rural lending. Its August 2025 report made 19 recommendations, and in November 2025 the Government agreed or partly agreed with all of them.
The Government’s response notes it had approved a Kiwibank capital raise of up to $500 million in July 2025. It also said it would write to banks encouraging them to disclose profitability on transaction, on-call and savings accounts, and ask the Financial Markets
Authority to consider investigating transaction account pricing. Major banks and regulators went back before the committee in February 2026.
In December 2025 the Reserve Bank lowered Tier 1 capital requirements for the largest banks, while adding a requirement for new loss-absorbing instruments, according to NZBA’s August 2026 regulatory summary. KPMG says the review’s finer risk weights did little for the largest lenders, because the internal-model rules they use stayed largely unchanged.
The banks’ case
Antonia Watson, then ANZ NZ chief executive and NZBA chair since April 2026, says the system is well run, well capitalised, well-funded and well regulated. That, she says, is what lets people buy homes, grow businesses and ride out financial shocks.
The latest results show margins tightening. ASB’s cash profit fell 2% to $1,318 million in the year to June 2026, as operating expenses rose 16%, driven mainly by settling a Credit Contracts and Consumer Finance Act class action, inflation and tech hiring. ANZ NZ’s cash profit rose 2% to $1,238 million for the six months to March 2026, while its net interest margin fell 5 basis points.
Kiwibank’s profit dropped from $191 million to $174 million in the year to June 2026, though its lending grew $3.1 billion. KPMG argues scale now decides who can compete, because technology, cyber security, scam defenses and compliance are fixed costs smaller banks struggle to carry. It expects more consolidation over the next five years.
Where business borrowers fit
For business owners, the lending mix matters. NZBA figures for June 2026 show $402.7 billion in bank loans to households, $133.4 billion to business and $64.5 billion to agriculture. KPMG says housing still drives lending growth, with business lending a smaller contributor and agriculture broadly flat.
Some banks report stronger business lending. ASB says it had its strongest year for business lending growth in almost a decade, and ANZ NZ says lending to its smaller business customers rose 4% over the half.
The committee has asked for progress updates every six months, and Payments NZ answered its latest questions in August 2026. In the meantime, the switching service and NZBA’s comparison calculator are already live for anyone who wants to check whether their bank is still the best deal.
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