ANZ says profit reflects a stronger economy – economists disagree
ANZ’s record full-year profit of more than $2.5 billion has sparked backlash after chief executive Antonia Watson (pictured) described the result as a positive sign for New Zealand’s economy.
Watson said banks reflected the health of the economies they operated in – and the strong result showed New Zealand was “turning a corner".
“It has taken New Zealand longer than hoped to recover from the post-Covid rebalancing, but there are now signs the nation's economy is finally picking up,” she said.
Westpac also reported a 13% rise in annual profit, adding to the perception of a profitable year for the country’s major banks.
However, several economists and financial experts have challenged ANZ’s framing – arguing that the results say more about bank margins than about economic recovery, RNZ reported.
The comments come amid mixed economic signals. Inflation expectations have remained contained despite a recent uptick in headline inflation, giving the Reserve Bank (RBNZ) room to continue cutting the OCR.
‘Really insulting’ to struggling New Zealanders
Lyle McNee, portfolio manager and co-founder of savings fund provider Wedge, said it was misleading – and even offensive – to link record bank profits with economic improvement.
“Of course, these profits don't signal a stronger economy. They highlight just how bad New Zealanders are being treated by their banks – especially in terms of how little interest they received on their deposits,” McNee told RNZ.
McNee described Watson’s remarks as “actually really insulting to all those people who have been struggling under the weight of such a weak economy this past year.”
He said ANZ’s net interest margin – the gap between what it pays on deposits and charges on lending – was 2.6% in New Zealand compared with 1.83% in Australia, underscoring how profitable the bank’s domestic operations have become.
Economists call it a ‘comms lie’
University of Auckland economist Robert MacCulloch said he “thought it was a comms lie", while Simplicity chief economist Shamubeel Eaqub agreed that profits do not necessarily reflect a strengthening economy, RNZ reported.
“If you look at where the profit growth has come from, it’s all from personal, not from business and agriculture at all,” Eaqub said. “Banks are not a leading indicator of the economy. They win when the economy goes up, they win when the economy goes down.”
He added that the gains came primarily from the household sector.
“Where they're making the profits is on the personal side of things because we're not going to not pay our mortgages, right? It's not surprising,” Eaqub said.
He said profits typically lag economic recovery, noting that early recovery periods often see businesses adjusting before earnings catch up.
“First you get customers coming back… we tend to find profits lag the economic cycle versus the sales improvement, then the jobs improvement, then the profit improvements,” Eaqub said.
Recovery signs still ‘very small’
Infometrics chief forecaster Gareth Kiernan said he was not convinced ANZ’s results pointed to a turning point.
“There are small signs the economy may be starting to turn around including some job and labour market data but they are still very small at this stage,” Kiernan said.
He noted that the housing market remains soft, meaning key economic drivers have yet to show meaningful momentum.
Massey University banking expert Claire Matthews agreed, saying ANZ’s interpretation did not fit the data timeline.
“The ANZ profit is for the 12 months to September 30, 2025 – are they honestly arguing that 12-month period represented an improving NZ economy? No one else seems to be suggesting that,” Matthews said.
“I’ve seen very recent comment that the NZ economy might now be picking up, but that would not be reflected in bank results until at least the half-year results to March 31, 2026.”
ANZ defends performance, points to SME lending growth
In response, ANZ said its profit growth reflected business activity, not just margins, highlighting stronger lending to smaller firms and farmers.
“Overall, ANZ business lending is up 2.3% over the year to $25.5 billion, driven by increased lending to small and medium business customers,” the bank said. “Growth in lending to larger institutional and corporate customers was more muted.”
The bank added that lending to small business customers grew at more than double the market rate, and agri lending also rose faster than average, with farm savings up 17%, RNZ reported.
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