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Westpac’s market share declines

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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