If you are wondering why the Australia and New Zealand Banking Group (ASX: ANZ) share price is lagging the other big banks, it's probably because its haemorrhaging market share.
While three of the four big banks are underperforming the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index, the ANZ share price is the worst as it's fallen by more than 7% over the past year to $26.74 on Friday.
The National Australia Bank Ltd. (ASX: NAB) share price is in third spot with a decline of around 3% and the Westpac Banking Corp (ASX: WBC) share price is largely flat over the period. The Commonwealth Bank of Australia (ASX: CBA) share price is the only one that's beating the ASX 200 with a gain of about 12% when the index is up 5%.
Market share and share price link
What strikes me is that the performance of the bank stocks seems to be related to their share of the home loan market with a report in the Australian Financial Review highlighting the collapse in ANZ's loans as a percentage of the total market.
The laggard's book of owner-occupier mortgages was $176.9 billion in June this year and that equates to 15.7%, according to APRA's data. It's book of investment loans was $76.8 billion, or 13.8% of the market.
In contrast, ANZ's share of the owner-occupier market was 16.4% and investor loan market was 14.7% in June 2018.
This marks an unprecedented drop in market share for a big bank, according to industry insiders quoted in the AFR.
What's worse for ANZ shareholders is that the bank may never recover lost ground with an expert noting that a big bank can only hope to regain 0.5% of market share over five years if it had a very well executed strategy.
No easy fix for ANZ
The bank's injuries are also believed to be largely self-inflicted. It's reported that the bank clamped down harder than its rivals in scrutinising loan applications in the wake of the Banking Royal Commission and have adopted illogical practices.
For instance, ANZ would turn down applications from mothers returning to work after taking maternity leave as they didn't have three months of payslips and rejected newly promoted applicants as they weren't in the job for a long enough period of time.
The bank lost support from mortgage brokers due to the time it would take to process applications and because of its stricter policies for approving loans.
The problem is that ANZ is more reliant on brokers as it has shuttered branches to cut costs, and while it has rectified many of these issues (not to mention hiring US celebrity David Hasselhoff to spearhead its latest ad campaigns), experts think it will be a long uphill battle for ANZ.
