Consumer NZ: Trust in banks diving sharply amid soaring profit announcements

New research from Consumer NZ has found that trust in banks is dipping, with 39% of New Zealanders stating they do not trust the banks. This is the highest level of distrust since Consumer began tracking sentiment in June 2021.

Banking customers are also expressing frustration with how much they are being charged in bank fees.

“Even before the latest bank profits were announced we found that New Zealanders increasingly felt they were being charged too much by the banks,” said Jon Duffy Consumer NZ Chief Executive.

“Our latest sentiment tracker data indicates, for people with personal debt, bank fees are taking an increasing toll, which highlights the growing burden of these costs,” said Duffy.

Last week ANZ announced a half-year after tax cash profit of $1.107 billion, up 14% on the same period the previous year. BNZ’s half-year profit of $805 million was up 13.5% on last year.

“While we appreciate banks are not charities and should make a reasonable profit, the question is what level of profit is reasonable and at what point does profit become excessive,” said Duffy.

Westpac’s latest after-tax profit of $426 million represents a 33% drop on the same period last year.

“Westpac has explained this drop in profit is partly due to setting aside funds to cover bad loans. Its profit before setting aside this provision for bad debt is up 8%.”

Consumer’s latest banking satisfaction survey found a correlation between the size of the bank, and level of satisfaction with service – with the big four banks scoring the worst in customer polling.

“Over the last decade, hundreds of bank branches have closed their doors. Over a quarter of those we surveyed said the worst aspect of banking was related to their branch, or access to it.”

Consumer’s surveying has found that satisfaction with customer service and call centre service has improved over time. However, customer satisfaction with in-branch service and product and service advice is in decline.

“With the level of profits the banks are taking we would expect to see reinvestment in services leading to improved customer satisfaction levels across the board.”

Earlier this week Westpac came under fire for deducting direct debits twice from some customers’ accounts – leaving many out of pocket.

“If banks reinvested some of their considerable profits to innovate and improve customer experience it may go some way to alleviating New Zealanders’ frustrations,” said Duffy.

“Time and time again we are seeing the sectors that rake in the largest profits are the sectors with the lowest levels of competition and low levels of customer satisfaction.

“Competition benefits consumers, it forces providers to up their game to hold on to customers.”

Only 4% of New Zealanders switched banks last year, suggesting competition for customers is low.

“We suggest people consider switching if they’re not happy with their bank.

“There is a perception that switching banks is difficult. However, of those that did switch banks last year 75% said the process was easy.”

Consumer would like to see increased competition and some new entrant activity in New Zealand’s banking sector.

"The message is clear – amid huge profits, customers are not receiving a banking experience that they consider to be up to scratch and competitive."