CBA forfeits four years of market share gains

Commonwealth Bank has given up most of the market share gains achieved subsequent to its takeover of Bankwest at the height of the financial crisis, at the end of 2008.

CBA acquired Bankwest (from the distressed UK bank HBOS) for less than the value of its net assets.

Commonwealth's market share in home loans peaked at 28.6 per cent in April 2010 (measuring the bank's market share as a percentage of all banks' mortgages). This was an increase of around 130 basis points on its market share immediately following the Bankwest takeover.

The bank's market share has since declined to 27.15 per cent, a loss of home loan business equal to A$17 billion or about five months' growth in the home loan market.

On the liability side, CBA's market share of household deposits peaked at 32.6 per cent at the date of the Bankwest takeover. CBA's market share in deposits has declined by 320 basis points to 29.4 per cent of the market since then.

This is equal to $18 billion in deposits (which is also equal to five months' growth in this market).

This is only partly due to CBA allowing the low margin hot money in the Bankwest book to run off, with 160 of the 320 basis points in reduced market share of deposits explained by the positioning of Bankwest.

The remainder of the loss in market share is a function of CBA's business mix.

Tracking the ebb and flow in market share for CBA and other banks is an exercise muddied by the periodic and sometimes major revisions to data submitted by banks to the Australian Prudential Regulation Authority.

CBA corrected some of its data for the regular release by APRA on Friday. This correction sliced around 50 basis points off its home loan market share, with these loans reclassified as business loans, lifting CBA's market share by 140 bps in this category.