The new Reserve Bank Governor, Graeme Wheeler, has denied a Green Party claim that he has downplayed New Zealand bank profits.
Green Party co-leader Russel Norman has accused Wheeler of misleading Parliament.
Norman said that Wheeler played down the banking sector's profitability during a Finance and Expenditure Select Committee meeting last month, saying that the profits of New Zealand banks were "about average or below" most other OECD economies.
"The Governor was wrong to tell Parliament that our foreign-owned banks are only making average, or below average profit,'' Norman said.
"Our new Governor's complacency about bank profitability is concerning. His job is to regulate our banks, not be their champion."
But Wheeler said today New Zealand's banks are still not back to where they were before the global financial crisis.
"As I said at the Select Committee hearing, bank profitability has recovered to where it was prior to the global financial crisis, based on returns on assets," he said in a statement.
"If you look at the return on equity, they haven't got back to where they were prior to the global financial crisis, and that's partly because these banks are building up capital as part of the tougher Basel III regulatory requirements."
The Reserve Bank today released data for the period 2009-2011, which shows returns on equity and assets of New Zealand banks appear to be in line with other advanced economies, excluding euro area countries.
The Green Party, which requested the data under the Official Information Act, said the figures showed New Zealand banks' pre-tax returns on assets from 2009-2011 make them the fifth most profitable banks in the OECD, with only Iceland, the Czech Republic, Singapore, and Australian banks more profitable.
Wheeler said the RBNZ commissioned the data before the Finance and Expenditure Committee hearing into the Bank's Financial Stability Report on November 7. However, the analysis was not complete at the time of the hearing, at which he was asked about bank profits.
"My response to the Select Committee represented my understanding of the information available at that time. Our analysis was completed after the hearing and we released it to the Green Party in response to their request, which followed the hearing. We are now releasing it publicly," Wheeler said.
Wheeler said different measurement practices around the world, including or excluding tax and extraordinary items, meant that international comparisons of bank profit figures are not straightforward.
"Profits in the New Zealand banking system reflect relatively low levels of non-performing loans, and low cost-to-income ratios, compared with many other countries," he said.
Wheeler also denied a Green Party statement that the Reserve Bank is biased in favour of Australian banks.
"The Reserve Bank takes seriously its mandate from Parliament to supervise the New Zealand banking system, and it does so without favour," he said.
"Australasian-owned banks emerged in better shape from the global financial crisis because of their more conservative management, and our economies benefit from that strength."
New Zealand's strong banking system helped see the country through the global financial crisis, he said.
This week, Wheeler will be back before Parliament when he appears before the Finance and Expenditure Select Committee to present the quarterly Monetary Policy Statement.
The central bank is expected to hold the Official Cash Rate
(OCR) at its historic low of 2.5% when it releases the review on