Auckland business reports lack of bank support

The Auckland Chamber of Commerce has counted 394 businesses who believe there is a lack of support for business from banks.

This was out of a total of 494 respondents to a survey by the chamber over 24 hours.

The sounding was taken to contribute to a debate about whether banks are over-charging in New Zealand compared to Australia and are slow to pass on interest rate reductions.

Of 265 businesses with overdraft facilities secured by property, 202 said they are paying an interest rate in excess of 10 per cent.

The Reserve Bank of New Zealand last week cut the official cash rate by 50 basis points to 2.5 per cent, raising an expectation that mortgage and business lending rates would fall.

Banks have been fairly slow in dropping their mortgage rates, Finance Minister Bill English said on Monday.

The major banks' current floating mortgage rates are between 6.4 per cent and 6.5 per cent.

The banks argue that the rates they can offer are being driven by the cost of borrowing.

They also say this explains why they offer lower rates across the Tasman despite a higher cash rate there.

English said the Government was keeping a watching brief on the issue.

Chamber chief executive Michael Barnett said that given the security small and medium sized businesses were providing to banks the rates respondents were reporting were "unhelpful" in the present challenging economic climate.

Australian bank Westpac yesterday reported that it had made a $202 million profit in the half-year to March 31 in New Zealand, down 15 per cent on last year.

Last week, ANZ National Bank, New Zealand's biggest bank, reported a $494m profit in the six months to March 31, down 5 per cent from last year, but up 24 per cent from the previous six months.

- NZPA