Australian banks made $772 profit for every person in New Zealand this year, with a large chunk of it heading over the Tasman.
The "super" profits have sparked outcry from unions and the Greens, who say the big four Australian banks are milking the New Zealand economy.
But the banks say bigger profits are good news, reflecting an improving economy and stable finance sector.
Despite tough economic headwinds, the "big four" Australian banks - BNZ, ANZ/ National, Westpac and the ASB - reported a combined $3.4 billion profit after tax in New Zealand, up an average of 20 per cent on last year. The biggest bank, ANZ, reported a record $1.27b profit, exceeding the unprecedented windfalls in the lead-up to the global financial crisis.
Massey University banking lecturer David Tripe said the Australian banks were making big profits, but they were massive businesses.
While it was hard to measure whether bank profits were "excessive", their profitability was not out of kilter with other big New Zealand firms.
"There is a bit of excitement generated because the numbers are big but these are big companies."
If New Zealand was not profitable for banks, they would cut lending, which could be disastrous for the economy. "If the banks weren't making money, we would be really worried."
But Greens co-leader Russel Norman said the sheer size of the profits was unjustifiable. Banks were a domestic service that should roughly reflect the financial health of their customers.
First Union finance secretary Andrew Casidy said a 20 per cent jump in profits was simply excessive in the post-financial crisis world.
A raft of announcements in the past few months have shown bank profits grew through less bad debt, more deposits and slightly wider lending margins - the difference between the cost of funding and the interest rates on loans.
With each announcement, the banks have carefully emphasised the billions of dollars they are pumping into the New Zealand economy through wages, taxes and contractors.
Together the big four paid $1.3b tax this year but in 2009, they banks agreed to pay the Government $2.2b in unpaid tax after a lengthy legal battle. Fairfax NZ
- © Fairfax NZ News
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