The Four Australian-Owned Banks Make More Profit Than the Rest of New Zealand’s 200 Largest Companies Combined
That sentence is not rhetoric. It is arithmetic.
In 2024, ANZ, ASB, BNZ and Westpac earned a combined profit of roughly $6.5 billion in New Zealand. That same year, the entire Deloitte Top 200 — the 200 largest companies operating in this country, with the banks excluded — generated combined after-tax profits of $6.04 billion.
Fonterra, Auckland Airport, Mainfreight, Spark, Air New Zealand, Fisher & Paykel Healthcare, The Warehouse, every supermarket, every utility, every primary industry exporter on the list — added together — earned less than four foreign-owned banks.
That is not a small structural quirk. That is the shape of an economy that has handed its most profitable industry to someone else.
The headline number
The Big Four’s individual results from their most recent reporting cycles, drawn from KPMG’s Financial Institutions Performance Survey and the banks’ own disclosures.
- ANZ New Zealand — $2.171 billion (most profitable single business in the country)
- ASB — $1.617 billion
- BNZ — $1.509 billion
- Westpac NZ — $1.184 billion
Each of those four banks, on its own, earns more than Fonterra, the largest non-bank company in the country, which posted $1.1 billion in 2025. ANZ earns nearly twice Fonterra. ASB on its own earns more than Auckland Airport ($421m), Lotto ($405m) and Fisher & Paykel Healthcare combined.
To put it another way, if you wanted to match the Big Four’s combined profit using New Zealand’s other large companies, you’d have to add up Fonterra, Kaingaroa Timberlands, Auckland Airport, Lotto, Mainfreight, Fisher & Paykel Healthcare, Spark, Contact Energy, Meridian, Infratil, Air New Zealand, The Warehouse Group — and you’d still be short. You’d be working your way well past the top thirty companies on the Deloitte index before you got there. The banks are not just the most profitable sector in New Zealand. They are, in profit terms, larger than most of the visible economy.
And almost all of that profit leaves.
Where the money goes
ANZ NZ is wholly owned by ANZ Group in Melbourne. ASB is wholly owned by Commonwealth Bank of Australia in Sydney. BNZ is wholly owned by National Australia Bank in Melbourne. Westpac NZ is wholly owned by Westpac Banking Corporation in Sydney.
When the banks make profit, that money does not stay here. It is paid as dividends to Australian parent companies, where it is then distributed to Australian (and global) shareholders, reinvested in Australian operations, or used to fund acquisitions outside New Zealand. A small portion is retained as capital in the NZ subsidiaries because the Reserve Bank requires it. The rest goes home.
Some defenders of the current arrangement will tell you the profits are not “extracted” — they are payment for services rendered. The banks process payments, lend money, take deposits, manage risk. That is true. But it is also a sleight of hand. New Zealanders pay for those services through fees and through the difference between what banks pay on deposits and what they charge on loans. That payment is captured in revenue. Profit is what is left after the banks have already been paid for everything they do. Profit is the surplus. And the surplus, in our case, is roughly $6.5 billion a year, and it leaves.
To be even-handed, not 100% of NZ profit is repatriated in any given year. Banks retain some earnings to grow capital and meet regulatory requirements. The Reserve Bank’s 2019 capital review forced the four to find an extra $20 billion in capital over a phased period (around $11 billion in equity and $9 billion in eligible preference shares), and a chunk of recent profit has gone there. But over the long run, the steady state is dividends out. The point of owning a foreign subsidiary is to receive the dividends. If profits stayed entirely in New Zealand, ANZ Group would not own ANZ NZ.
Why the profits are so large
The Commerce Commission completed a market study of personal banking in 2024 and found what most New Zealanders already suspected. There isn’t really a competitive market here. The four banks hold around 90% of all banking assets. Their net interest margins — the gap between what they pay for funding and what they charge for lending — are persistently above the upper quartile of comparable developed countries. Their return on equity sits in the same bracket. By international standards, NZ is one of the most profitable banking markets in the world.
This is not because Australian banks are unusually clever. It is because the structure of the market lets them be unusually profitable. Switching banks is a hassle. Mortgages are sticky. Smaller competitors face regulatory burdens that scale poorly. The four majors have effectively converged on a comfortable equilibrium in which they don’t compete particularly hard with each other. Lending is dominated by housing — around 70% of total bank lending in New Zealand is now property-secured, and ANZ’s number is 72% — because mortgages against existing houses are low-risk and high-margin. Productive business lending, which actually grows the economy, attracts higher capital weights and earns smaller margins, so the banks do less of it.
In other words, New Zealand’s banking sector has reorganised itself around the most profitable and least productive form of lending available. It collects a margin on every house, and every refinancing, and every top-up, and ships the surplus to Sydney and Melbourne.
The cost beyond the dividends
The dividend outflow is the obvious cost. There are several less obvious ones that compound it.
The capital market that didn’t develop. When a country’s largest companies are foreign-owned, they don’t list on the local stock exchange. The NZX has no major bank listing. KiwiSaver funds and individual investors who want exposure to bank profits have to buy the Australian parent companies, sending capital across the Tasman. The Capital Markets 2029 report identified this as a primary reason the NZX underperforms its international peers. A country whose largest businesses are not investable on its own exchange will always have a smaller, shallower, less liquid capital market, and that affects every other company trying to raise money domestically.
The headquarters that aren’t here. Bank head offices generate well-paid, professional, secure jobs in legal, treasury, risk, technology, strategy and corporate finance. They support law firms, accounting practices, consulting firms, and a whole ecosystem of professional services. Most of those head office functions sit in Sydney and Melbourne, not Wellington and Auckland. The career ceiling for a New Zealand banking professional is lower than it would be if the parent company was here, because the senior strategic roles are abroad.
The lending bias toward housing. Because the banks make so much money lending against houses, they have very little incentive to develop the kind of patient, productive business credit that growing economies need. New Zealand has one of the lowest rates of business investment in the OECD and one of the most leveraged household sectors. These two facts are connected. A banking sector dominated by mortgage lending is a banking sector that is structurally indifferent to whether anyone builds a factory.
The crisis question. In a serious financial crisis, the parent banks will look after their parents first. Australian regulators will require it. NZ subsidiaries are legally separate, but the people running them, the systems they depend on, and the capital backing them all sit across the Tasman. The IMF has flagged this for two decades — when nearly all systemically important banks are foreign-owned, the NZ government’s options in a crisis are constrained in ways that are hard to predict in advance and very hard to reverse once the situation is unfolding.
The concentration problem. Foreign ownership in itself is not the deepest issue. The deeper issue is that the foreign ownership is almost entirely Australian. If the Big Four were owned by banks from four different countries — Japan, Canada, Singapore, the UK — the country would at least get the diversification benefit that foreign ownership is supposed to provide. Instead we have the worst of both worlds. Profits leave, but the systemic risk doesn’t get diversified away because the Australian and New Zealand economies move together. A shock that hits Australia transmits straight through.
The honest counter-argument
It would be dishonest to write this piece without acknowledging the case for the current arrangement, because there is one and it is not trivial.
The Australian parents bring deep capital. New Zealand on its own does not have a capital pool large enough to underwrite the balance sheets of four banks the size of the Big Four. KiwiSaver is growing but still relatively small. The historical track record of NZ-owned banks is not encouraging — BNZ nearly collapsed in the late 1980s and had to be sold to NAB precisely because the NZ government and minority shareholders could not recapitalise it. The finance company sector blew up spectacularly between 2006 and 2010, taking around $3 billion of NZ savers’ money with it. “New Zealand-owned” does not automatically mean “well-run” or “stable.”
In 2008, when the global financial system convulsed, the Big Four NZ subsidiaries were backstopped by their Australian parents, which had themselves been backstopped (implicitly and to some extent explicitly) by the Australian government. New Zealand avoided an Iceland-style banking collapse partly because the implicit guarantee sat in Sydney rather than Wellington. That mattered. It is genuinely possible that a fully domestic banking sector would have been more fragile.
So the question is not “is foreign ownership bad?” in some abstract moral sense. The question is whether the price New Zealand is paying — roughly $6.5 billion a year, plus the structural costs above — is worth the stability and capital depth it buys.
The price is no longer worth it
For a long time the answer to that question might reasonably have been yes. In a world of frequent banking crises and shallow domestic capital markets, having someone else’s balance sheet underneath the country was a real benefit.
That world has changed. Banks globally now hold far more capital than they did pre-2008, partly because of Basel III and partly because the Reserve Bank of New Zealand specifically required it. New Zealand has just introduced a deposit insurance scheme. KiwiSaver passed $123 billion in funds under management at March 2025 and has continued to grow at around 10% a year. The capital depth argument that justified the post-1990s ownership structure is weaker now than at any point in the last forty years.
Meanwhile, the costs are not getting smaller. Bank profits are at record highs. The lending mix has tilted further toward housing. The Commerce Commission has found, on the record, that the market is not competitive. The dividends that leave New Zealand each year now exceed total profits of the country’s 200 largest non-bank businesses. This is not a stable equilibrium for an economy trying to grow productivity.
The full unwinding — forcing divestiture, breaking up the Big Four, nationalising one — would carry stability risks that are probably worse than the disease. But there are intermediate options that reduce the cost without creating a crisis. Properly capitalising Kiwibank and giving it a clear mandate to discipline margins. Implementing open banking rules that let smaller banks and fintechs compete at the edges. Using the new deposit insurance scheme to genuinely level the playing field for non-Big-Four institutions. Making the regulatory burden proportionate so smaller banks aren’t crushed by compliance costs designed for systemic players. Encouraging at least one of the Big Four to list a meaningful stake on the NZX so New Zealanders can own a piece of the profits being generated from their own mortgages.
None of these get the past wealth back. The compounding of forty years of repatriated profits is not recoverable. But they could, slowly, change the direction of travel.
What this is, in plain terms
A small country sold its banks. It got, in return, capital depth and crisis stability that mattered at the time. It also got, in return, a permanent claim on its productive surplus that has compounded for decades and now removes more profit annually than the rest of its largest companies combined produce.
The defence of the status quo rests almost entirely on the fear that any alternative would be worse. That fear was reasonable in 1990. It is becoming less reasonable every year. The cost of doing nothing is not zero. The cost of doing nothing is roughly $6.5 billion a year, every year, indefinitely, until something changes.
It is fair to say that foreign bank ownership is not “all bad.” It is also fair to say, looking at the numbers, that the bargain is no longer a good one for New Zealand, and that anyone who looks at $6.5 billion leaving the country annually and concludes the system is working well is not really looking at the country at all.
Sources — KPMG Financial Institutions Performance Survey 2024; Deloitte Top 200 Index 2025; Reserve Bank of New Zealand; Commerce Commission Personal Banking Market Study 2024; IMF Financial System Stability Assessments; interest.co.nz; NZ Herald; RNZ; Reserve Bank Bank Financial Strength Dashboard; FMA KiwiSaver Annual Report 2025.
What do you think? Is the bargain still worth it, or is it time New Zealand started reclaiming a piece of its most profitable industry? Drop a comment below.