Competition keeps bank margins low: KPMG
The survey noted that the struggle for home loan customers had driven a drop of nine basis points in return on assets across the sector in the December quarter.
It said customers switching to cheaper fixed rates were keeping interest margins flat. The net interest margin for the sector decreased by one basis point, although there was a lot of variation between the institutions.
Co-operative Bank increased its interest margin by 11 points while ANZ and Kiwibank had decreases of 12 and 9 basis points, respectively. Westpac increased its interest rate margin by four basis points. Ian Blair, the general manager of business banking, said competition had been fierce for a while.
Aggressive offers, such as cash offered by ANZ and ASB’s free TV deal led to a higher degree of competition in the market as banks fought to hold on to their market share, as well as acquiring new customers.
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