Labour attacks NZ bank profits 07 August 2015 4:07PM Bernard Hickey New Zealand's Labour Party has launched an all-out attack on the Big Four Australian banks' profits in New Zealand, saying they were making a mint from their customers and using their New Zealand arms as cash cows.Labour consumer affairs spokesman David Shearer told Banking Day the four banks - Commonwealth Bank of Australia's ASB, ANZ, Westpac and National Australia Bank's BNZ - were making much higher profits in New Zealand than their parents were in Australia.Shearer said they should reduce pressure on heavily indebted dairy farmers and instead dip into their record high profits to share the pain.He said they had also not passed on most of the falls in interest rates since 2008 to credit card customers and were not paying enough to term deposit savers.Labour is the biggest opposition party alongside the Green Party and the nationalist New Zealand First Party. These comments on bank profits are the strongest yet from either side of Parliament.Shearer pointed first to credit card interest rates, which had only dropped to around 17.5 per cent from around 18.5 per cent in 2008, while the Official Cash Rate had dropped from over eight per cent to three per cent."Credit card interest rates have dropped a measly one per cent while the banks have made a cool five per cent drop in the cost of the money they borrow," Shearer said.Shearer said he had decided to look more closely at bank profits after he was personally charged a NZ$10 fee for three months running for accidentally exceeding his overdraft limit, "even though they knew I was a safe bet.""I bet lots of other New Zealanders are getting hit as well," Shearer said."I looked at what the Australian banks earned in New Zealand and what they earned proportionately in Australia, and found the returns in New Zealand are much higher than what they are in Australia," he said.Shearer said research from the Parliamentary Library showed the Big Four Australian-owned banks made profits equivalent to 1.6 per cent of assets in New Zealand, while their parents were making 1.28 per cent in Australia. Their peers in the United States were making 1.1 per cent and bank profits were 0.37 per cent in Britain.Shearer said he did not have any evidence of collusion or cartel behaviour, but he pointed to similar floating mortgage rates, term deposit rates and credit card rates, while competition was fiercer on fixed mortgage rates.He also warned banks against pushing farmers into receivership."It would look very bad if they started foreclosing on farms when many of those agricultural advisers those banks had put out there had been encouraging them to take on more credit."Shearer called on the Government and the Reserve Bank to take a closer look at bank profits."Those agencies should be taking a much closer look at our banking sector than they have been. I know (Finance Minister) Bill English has spoken to the banks about farmers, but he should be giving a pretty clear steer of what he expects from banks," he said.