Are we looking at capital constraints at work in the banking sector?

Former finance and expenditure committee chair Stuart Smith said last year that ANZ Bank New Zealand was essentially a glorified building society. Source: National Party.

We may be seeing signs that Kiwibank is becoming capital constrained again because its lending to small and medium-sized businesses slowed to a comparative crawl in the March quarter and the pace of its growth in mortgage lending is also slowing.

However, Kiwibank still lent more on mortgages that Westpac, the smallest of the big four Australian-owned banks, in the year ended March.

ANZ Bank New Zealand, our largest bank, has also taken its foot off the accelerator across all types of lending, with mortgage lending growing well below its market share and its lending to businesses and farmers is contracting.

Does that mean that capital constraints are limiting ANZ and Westpac’s ability to compete?

I don’t know the answer to that, but it does seem like a question worth asking.