As mortgage rates increase and the cost of living bites, it's hard not to automatically think New Zealand's big banks are making too much money.
Yesterday, ANZ, NZ's biggest bank, posted a full year profit of just over $2 billion - up 8% on the year before.
The other major banks aren't doing badly either, with KiwiBank recording its biggest profit of $131 million, a 4% increase on 2021.
ASB had an 11% rise to $1.4 billion, while in their half-year results, Westpac and BNZ had profit increases as well.
It comes at a time when they are all hiking mortgage rates on the back of stubbornly high inflation and ongoing official cash rate increases.
One banking expert, however, cautions against thinking billion-dollar profits are a bad thing. In fact, associate professor Claire Matthews of Massey Business School says we want to see banks making a healthy profit.
"If banks don't make a profit it means they make a loss and then they get into a situation where they may not be able to repay their depositors, and fail, and that creates a whole lot of problems," she told 1News. "So we don't want to see that."
The question of how much is too much is trickier, she admits - there is no right answer.
"It comes down to recognising the banks are growing so they are going to continue to make more profit," she said.
"But, they have to make good profit in good times because when things don't go so well, they need to have a buffer built up to cover them so that they still continue to operate. So they can cope with occasional losses.
"The problem is, we have forgotten that banks do make losses because fundamentally, it's been a long time since banks in New Zealand have had any substantial financial problems.
"They have been doing really well for a long period of time. In the global financial crisis they lost a little bit of money but they really weren't hit very badly in New Zealand and Australia as they were in other parts of the world."
Matthews says it's been a whole generation since the banks lost substantial money in the late 1980s and early 1990s.
New Zealand's banks weren't as badly hit by the global financial crisis, and as New Zealand has weathered the Covid pandemic better than others, they haven't seen as many loans go bad.
However, as people struggle with higher interest rates and lower house prices, that could change.
"Potentially the banks will find that things will be a little bit more difficult. It just takes time for that to flow through to bank profits."
She pointed out that while the big four - ANZ, ASB, BNZ and Westpac - were Australian owned, hundreds of millions of dollars was put back into the New Zealand economy.
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