How the Big Four Banks Share the Mortgage Market

December 5th, 2013

The healthy mortgage market continues to be influenced by low interest rates, with the International Monetary Fund (IMF) urging regulators to further scrutinise property investment as prices rise. ; "Attention should be paid to the risk - as in any situation where asset price inflation accelerates - that a prolonged period of rapid price growth could give rise to expectations-driven, self-reinforcing demand dynamics and price overshooting," said the IMF in a recent statement.

However, the recent IMF report card into the Australian economy also recognised the strength of the big four banks and their ability to respond if a sudden house price decline should occur. ; While "the four major banks are systemic with broadly similar business models" and can "withstand a number of sizeable shocks" according to the IMF, "their reliance on wholesale offshore funding, although falling, still represents a risk."

>In terms of overall banking market share, Commonwealth Bank are out in front with 26.8 percent, followed by Westpac at 24.7 percent, NAB at 16.3 percent, and ANZ at 14.8 percent. ; The big four banks remain dominant with more than $27 billion in profits during the last year, with PwC Australia banking analyst Stuart Scoular saying "It's apparent that on many measures the Australian banking sector is among one of the world's most successful."

The Commonwealth Bank made the most profit in 2013 at $7.8b, up 10 percent from the year before. ; Despite their lowly position in the mortgage market, Westpac made $7.1b this year, up 8 percent from the year before. ; ANZ were up 11 percent from last year with $6.5b in profit, followed by NAB who were up 9 percent with profits of $5.9b. ; Despite record profits and a strengthening housing credit sector, however, business credit growth continues to decline, causing some concern for banks as they approach 2014.