This week was the start of the bank inquiry hearings into banking competition. The inquiry was confirmed in the NZ First/National Coalition agreement. 140 submissions were received on the inquiry, and we will hear from over 60 submitters including all the major banks.

ANZ, New Zealand's largest bank, was first to face questioning in a 45-minute grilling from the combined Finance and Expenditure and Primary Production Committees.

ANZ disclosed over $2 billion worth of profit last year with a rate on return of 12.3%. They paid $900 million in corporate tax, equation to 5% of total tax collected.

The question to be determined: is this appropriate return on low-risk investment? ANZ has over $17 billion invested and argues the returns are reasonable considering other factors of providing billion dollars in renumeration to employees. There was, however, little evidence suggesting banking failures or major risk in any of the lending categories including farm lending. There had only been two failures in the bank's rural portfolio in the past decade.

Stability of the banking sector is crucial for public and business confidence but at the same time we need to allow competition and innovation. The scale and size of the major banks however make it increasingly difficult for new and existing smaller players to enter or compete in the banking sector.

The inquiry will continue into early 2025, with report findings to be considered by Cabinet.