Finance and Expenditure Committee to grill bank bosses again; ASB CEO Vittoria Shortt happy to ‘get the facts on the table’

ASB chief executive Vittoria Shortt notes Parliament's finance and expenditure seclect committee members hadn't been aligned on the issues they wanted to grill bank bosses on.

ASB chief executive Vittoria Shortt is welcoming the opportunity to again be quizzed by politicians worried about the lack of competition in the banking sector, saying it would be good to “get the facts on the table”.

Parliament’s finance and expenditure select committee has said it will call the chief executives of ASB, ANZ, BNZ and Westpac back to reappear at a public meeting to answer follow-up questions as part of its banking sector competition inquiry.

The decision follows Prime Minister Christopher Luxon and Finance Minister Nicola Willis asking the committee to have a closer look at complaints banks are ditching customers that don’t meet their environmental and social policies.

Luxon and Willis waded into the debate after Minister for Resources Shane Jones made headlines, calling out BNZ for telling one of its coal mining customers that its accounts would be closed by 2030.

Banks have different policies aimed at limiting their exposures to emissions-intensive industries, but the extent to which “dirty” businesses, or those in sunset industries, are struggling to access banking services is unknown.

Finance and expenditure committee chair Cameron Brewer said the members of Parliament on the committee were yet to decide on specific topics to raise with the chief executives, who have already appeared for questioning.

He said debanking was something that could be investigated, alongside banks’ “excessive” profits compared to international peers, the lack of competition pressures, barriers to consumers changing providers, interest rate disparities and banks’ servicing of rural communities.

Speaking to the Herald, Shortt said she was always happy to engage.

Her observation was that committee members hadn’t been that aligned on the issues they wanted to dig into.

“I think they’ve got a really tough job, making heads and tails of the things that they want to focus on and the differing opinions of the members of the select committee,” Shortt said.

NZ First is particularly big on debanking, introducing a members’ bill to Parliament to try to stop banks from withdrawing services from customers for “woke” reasons.

On the topic of debanking, Shortt said the starting point was that the New Zealand Government had made a commitment to reducing emissions.

“In terms of ASB, our focus is on how we support our customers and their transition.”

Shortt said businesses were mindful of how to manage their climate-related risks, and ASB had always considered these risks because they affect businesses' performance.

She said historically, ASB hadn’t lent material amounts to coal mining businesses, but continued to lend to fuel retailers.

Shortt’s comments came as ASB reported a statutory net profit after tax of $763 million for the six months to December – a 2% rise from the same period in 2023.

ASB’s net interest margin (the interest income it received versus the interest expenses it paid) rose from 2.21% to 2.30%.

Shortt said the increase was derived from the hedging ASB did around its equity.

While it increased the margins on its home lending, these gains were offset by it decreasing the margins on its deposits.

Looking at another measure of profitability – return on equity – this fell in the six months to December compared with the same period in 2023.

Shortt said this was because ASB’s profit didn’t rise by as much as the capital it held to comply with Reserve Bank rules aimed at ensuring banks can withstand major shocks.

ASB has increased the amount of capital it holds by 48% since before the Covid-19 pandemic.

Banks need to keep increasing the amount of capital they hold until the Reserve Bank’s rules are fully phased in, in 2028.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.