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‘We need more of it’: NAB rues loss of mortgage market share

NAB chairman Philip Chronican has said the bank is intent on recovering lost ground in the home lending space, conceding that it needs to “sharpen its act”.

Appearing before the House of Representatives standing committee on economics on Friday (15 November) in his last day as interim CEO, NAB chairman Philip Chronican lamented the bank’s loss of market share in the home lending space.

Committee chair and Liberal MP Tim Wilson asked Mr Chronican if he was concerned about business risks associated with the sustained growth in demand for housing credit from non-majors and non-bank lenders.

In response, Mr Chronican noted the decline in the market share of the big four banks over the past years in response to “intense” competition. 

“The major banks, I think, were lending 80 per cent of all home lending only a matter of a few years ago and are now lending something like less than 60 per cent,” Mr Chronican said.

“That tells me that the competitiveness in the consumer lending sector is intense, and we need to sharpen our act and get more of it.”

The NAB chair conceded that the bank has fallen short of customer service expectations, particularly in light of its response to regulatory scrutiny in the mortgage market.  

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“I think our ability to deal with all the regulatory changes has not been up to the standard that it needs to be to make it a seamless experience for our customers,” he said.

NAB’s shortcomings in the mortgage market were reflected in its full-year results for the 2019 financial year (FY19), in which it reported a statutory net profit after tax of $4.8 billion, down from $5.5 billion in FY18.

Cash earnings generated by NAB’s Australian consumer banking and wealth business fell 11.2 per cent to $1.36 billion, partly driven by a decline in home lending volumes year-on-year.

NAB’s mortgage volumes dropped by approximately $15 billion, from $64 billion in FY18 to $49 billion in FY19.

As a result, the major bank reported a modest increase in its combined mortgage portfolio – which includes home loans originated via its business and private bank – from $303 billion in FY18 to $304 billion.

As at September 2019, NAB’s share of the mortgage market sat at 15.1 per cent, down from 15.4 per cent in the previous corresponding period.

[Related: Should banks automatically adjust repayments?]

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