'Break up' immaterial to NAB's retail gains

The monthly banking statistics for June 2011 from APRA provide an opportunity for an overview of the relative gains made by National Australia Bank since the relaunch of its paid advertising in mid-February with its "break up" campaign. The campaign also generated an above-average amount of free media coverage for the bank.

-- Household deposits: AMP Bank and Rabobank had the fastest-growing retail deposit books over three months. Of the big banks, ANZ recorded deposit growth of 1.1 per cent. NAB followed, but with much lower growth of 0.9 per cent. The deposit books of all the retail banks, in aggregate, were flat over this period.

While there is no very up-to-date data on the value of deposits held by NAB under its UBank brand, a few months ago this was around A$7 billion, and UBank has maintained the sharp pricing of its deposit products since that time.

NAB's rate of growth in household deposits did accelerate in the June 2011 quarter from the March 2011 quarter, but given the prominence of UBank, and the nature of UBank's pricing, it's a stretch to tie this recovery in the growth rate (which only brings the bank back to 2010 levels) to the break up campaign.

-- Home loans: NAB more or less leads the market with three-month growth of 4.2 per cent, better than twice the rate of growth of the mortgage market. Bendigo and Adelaide Bank achieved a rate of growth of 4.1 per cent with none of NAB's histrionics, and this hints at the most likely explanation for NAB's growth in home loans.

Bendigo, through its Adelaide Bank-branded wholesale funding arm, is growing above market through mortgage managers - just as NAB has grown at above market thanks to non-bank branded lending through Choice, Fast and Plan. This has been the case for the last year or two.

So, break up probably doesn't deserve the credit for above-average growth in home lending that is really "business as usual" for NAB.

-- Credit cards: NAB leads the market with three-month growth of 3.0 per cent, three times the rate of the rest of this lacklustre market segment. Bendigo and Adelaide, and ANZ are also attracting customers (or relaxing credit standards), with growth rates around half those of NAB.

Interestingly, the latest batch of paid advertising by NAB, and the first in the break up series that is product specific, is directed towards stimulating demand for credit cards.

The four tables in the following article provide an overview of NAB's relative gains in market share in key product markets in 2011.