Westpac’s market share declines

Westpac's market share declines

A higher standard variable rate than its competitors has this bank losing ground

Ryan Newman (TMFNewmy)

Ryan Newman (CFA) is the Director of Research of The Motley Fool Australia, and Portfolio Manager for the Pro and North Star services. Ryan’s interest in investing and stocks began at a young. His journey with The Motley Fool started first as a member but when the company first came to Australia he joined the team as one of our writers. Recognising his investing talent and passion, it wasn’t long before he was approached to join the investing team as a research analyst on Pro. Ryan is passionate about learning and continual development. He earned his Chartered Financial Analyst (CFA) designation in 2022, and has completed his Bachelor of Accounting and his Graduate Certificate of Corporate Finance. Ryan loves spending time with his young family as well as non-fiction reading, catching the latest movies and following his sports team, the St Kilda Saints (AFL).

Published July 3, 2013 8:15 am AEST

Although Westpac's (ASX: WBC) rally leading into May was greater than the surges of its competitors, new figures reveal that the banking giant's market share has in fact declined over the last year and that its level of growth was the slowest out of any of the big four.

It seems that Westpac could now be paying the price for having maintained a higher standard variable mortgage rate than the other banks, having lost 0.7% of its market share over the last year, according to The Australian Financial Review. Westpac's rate is 6.26%, compared to a 6.13% rate offered by ANZ (ASX: ANZ) and NAB (ASX: NAB) and 6.15% offered by Commonwealth Bank (ASX: CBA). Furthermore, figures from Australian Prudential Regulation Authority revealed that Westpac only increased its home loan lending by 0.4% in May, compared to the other banks which each increased their lending by between 0.6% and 0.7%.

Following the RBA's decision in May to cut interest rates by 0.25 percentage points, the ANZ passed on a marginally higher cut of 0.26 percentage points, whilst NAB also hinted at lowering rates out of sync with the central bank, reflecting easing funding costs. On the other hand, Westpac has remained hesitant to pass on the RBA's cuts, passing on less relief to customers than any of the other banks.

Foolish takeaway

In order to regain market share and popularity from home loaners, it seems that Westpac will need to begin decreasing their rate to get back in contention with its competitors. After meeting on Tuesday, the RBA decided to keep the official cash rate on hold at 2.75%. Whilst the other banks are also likely to keep their rates at current levels, any reductions in Westpac's rate would fare well with customers.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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