ANZ Chief Executive Mike Smith reportedly told a dinner for 100 of ANZ's biggest corporate borrowers last week that ANZ's lending margins would expand for the foreseeable future. The Australian reported from sources at the meeting that: "This was due to higher funding costs, as well as the repricing of loans to reflect greater risk following a spate of internal ANZ downgrades of customers due to deteriorating business conditions." Reserve Bank Governor Alan Bollard warned last week of growing corporate anger at the way banks had increased margins and toughened lending criteria in recent months. Bankers here have responded that some businesses' debt levels were no longer sustainable at previous margins and the banks have no choice. The issue of bank margins for business lending looks set to be a hot topic in the months ahead as cash-constrained businesses look for the interest rate relief offered by Bollard to be passed on to them. It frustrates many given the low rates, tightening margins and increased lending being offered to mortgage customers. * This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
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