Whatever way you look at it, ANZ is winning larger mortgage market shares for both home loans and rural mortgages. But challenger banks are also doing better

ANZ continues to gobble up home loan market share, winning more than a third of the growth in the final quarter of 2017.

Other banks who raised their market share in value terms include most of the challenger banks.

But all ANZ's main rivals leaked market share when it is measured on a value basis.

Mortgage market shares are relatively easy to assess from the RBNZ G1 data series, even if it does come with a four month delay.

As at December 2017 the data showed:

all mortgages Dec-2016 share Growth share Dec-2017 share
NZ$ bln $ % $ % $ %
             
ANZ 65.858 29.3 +5.331 35.4 71.189 29.7
ASB 50.279 22.4 +2.495 16.6 52.774 22.0
BNZ 35.712 15.9 +2.096 13.9 37.808 15.8
Kiwibank 16.154 7.2 +0.537 3.6 16.691 7.0
Westpac 45.342 20.2 +1.915 12.7 47.257 19.7
             
Co-operative Bank 1.899 0.8 +0.1969 1.3 2.095 0.9
HSBC 1.321 0.6 +0.336 2.2 1.657 0.7
SBS Bank 2.533 1.1 +0.399 2.7 2.932 1.2
TSB 3.648 1.6 +0.618 4.1 4.266 1.8
All others 1.398 0.7 +1.118 7.4 2.397 1.2
             
Total these banks $224.389 100.0 +$15.041 100.0 $239.430 100.0

This table is a stock, showing book balances at the above dates.

Clearly the winners are ANZ and all the challenger banks.

Clearly the losers of market share are ASB, BNZ, Westpac and especially Kiwibank.

In fact, in this data Kiwibank's 2017 growth was eclipsed by TSB a bank with only a quarter the size in its mortgage book.

But the big deficiency in this data is understanding exactly where these quite substantial shifts are occuring.

To get some understanding of the regional shifts, we need to turn to the raw LINZ data where we can find the volumes of new mortgages registered.

Like the values, that involves market share shifts.

And it also allows us to inspect the shifts between types, like Residential, Lifestyle, and Rural mortgages registered.

Here is that data analysed for the same year, except by volume (number of mortgages) for residential transactions only:

residential mortgages only Dec-2016 share Growth share Dec-2017 share
volume in year to ... # % # % # %
             
ANZ 39,355 29.6 -6,895 28.7 32,460 29.8
ASB 28,762 21.6 -7,501 31.3 21,261 19.5
BNZ 20,752 15.6 -4,087 17.0 16,665 15.3
Kiwibank 10,246 7.7 -1,927 8.0 8,319 7.6
Westpac 25,665 19.3 -3,472 14.5 22,193 20.4
             
Co-operative Bank 1,853 1.4 -316 1.3 1,537 1.4
HSBC 528 0.4 +204 -0.9 732 0.7
SBS Bank 2,333 1.8 -91 0.4 2,242 2.1
TSB 3,014 2.3 +32 -0.1 3,046 2.8
All other banks* 490 0.4 +64 -0.3 554 0.5
             
Total these banks 132,998 100.0 -23,989 100.0 109,009 100.0

This table is a Flow showing the transactions in the year for the period. Be careful interpreting the "Growth" percentages. These volumes are not the number of mortgages in Table 1; rather they are the number of new mortgages written in the referenced years.

This tells a different but still a very interesting story; there were -18% fewer residential mortgages registered by LINZ in 2017 than 2016, even as dollar values grew. That suggests fewer but much larger mortgages, rather than just more mortgages as suggested by the RBNZ valua data (up +6.7%).

ANZ's value gains are confirmed by this view. Even though they wrote fewer mortgages, their decline was less than all their other main rivals other than Westpac.

And the data in this view suggests that the challenger banks made 'real' relative gains, especially HSBC who adopted aggressive pricing during the period with a sub- 4% fixed rate offer.

ANZ and to some extent ASB made relative gains in rural mortgages versus their main rivals, although the really big movers in rural mortgage lending volumes were Rabobank, Heartland Bank, and perhaps somewhat surprisingly, TSB.

However, this following table takes a little longer view, comparing transactions in the December 2017 quarter with those of the same quarter three years ago when the rural (dairy) conversion was in still occurring.

rural mortgages only Dec-2014 share Growth share Dec-2017 share
volume in year to ... # % # % # %
             
ANZ 2,899 27.8 -264 23.2 2,635 28.3
ASB 1,922 18.4 -158 13.9 1,764 19.0
BNZ 2,123 20.3 -278 24.5 1,845 19.8
Kiwibank 153 1.5 -23 2.0 130 1.4
Westpac 1,359 13.0 -232 20.4 1,127 12.1
             
Rabobank 1,577 15.1 -178 15.7 1,399 15.0
SBS Bank 94 0.9 6 -0.5 100 1.1
TSB 114 1.1 -12 1.1 102 1.1
All other banks* 200 1.9 3 -0.3 203 2.2
             
Total these banks 10,441 100.0 -1,136 100.0 9,305 100.0

This table is a Flow showing the transactions in the year for the period. Be careful interpreting the "Growth" percentages.

In a separate review, we will look at regional mortgage shares.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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8 Comments

That RBNZ G1 data series you shared is really interesting. If you look at "Net profit as a % of average total assets", unfortunately, you can see the biggest four banks are way more efficient in how they deploy assets when compared to local counterparts. Would it be fair to say that for a genuine "challenger" bank to emerge in New Zealand (which is probably something most Kiwis would welcome) the local banks need to at least consistently match that level of financial performance?

Would it be fair to say that for a genuine "challenger" bank to emerge in New Zealand (which is probably something most Kiwis would welcome

That happened long ago. It's called KiwiBank

Ok so, given that I am a depositor. I want my bank to have fallen behind in terms of the recent writing of large mortgages.

Fair point but real issue is assessing the actual risk a Bank takes to judge if the interest offered is adequate and thats nigh on impossible for all beyond the top echelon of specialized economists and reserve Bankers.

the G1 xlsx from RBNZ is nastily ordered data. The column names change Kiwi become Kiwibank. the order of the columns changes between worksheets, and there's a major change of variables from 2013 onward :( Just wanted to do a quick plot of the defaults over time but not an easy task

Get the free / Express version of SQL, import all the date into various tables. The import wizard lets you map the to be imported columns to existing ones. The end result should be an easily graphable single grid.

Thanks, Yes that would work. I managed to do it with R. Here are some graphs if anyone is interested.

interesting analysis ... keep in mind though that G1 shows current balance of housing lending from GDS. This will include top ups and use of revolving limits that do not result in a new mortgage. Shame that the G1 is being discontinued :( twas a handy reference point.

However, I note your comments refer to quarterly growth ended December but your table is referring to 12m ended December. Is that a typo?

On a quarterly basis, the market grew 1.6% per G1 - ANZ 1.6%, ASB 1.7%, BNZ 1.2%, Kiwi 0.8%, Westpac 1.1%. Same quarter previous year, market was 2.1% growth... goes to show how much difference the Auckland market coming off the boil makes.