Subdued demand for fairer banking

National Australia Bank last week put some effort into highlighting the one year anniversary of its public relations push for the simplification of fees on many transaction accounts. A persistent question since is how effective this "fairer banking" initiative is proving to be. In household deposits the answer remains "not very effective".

APRA data for the month of June 2010 shows NAB recorded growth in household deposits of 0.6 per cent and compared with a banking sector average of 0.88 per cent.

NAB trails system growth rates on a 3-month (at 1.03 per cent versus 1.44 per cent) and 6-month basis (at 2.64 per cent versus 2.84 per cent) as well, though its 12-month growth rates is above system.

ANZ increased household deposits in June by 1.3 per cent. Commonwealth Bank matched system growth while Westpac reported growth slightly below system.

Other factors bear on NAB's disappointing growth in household deposits including the relative loss in competitive pricing on the bank's interest rates on offer through its UBank brand.

Some of the hot money may be flowing to Rabobank, which reported growth in household deposits of 28 per cent in the month of June and growth of 43 per cent over the June quarter.

Citibank, which has just launched the best priced at-call account in the deposit market in Australia in conjunction with Virgin Money is already growing deposits above system.

Citi recorded growth of 1.5 per cent in June, 6.2 per cent in the June quarter, 15.7 per cent over six months and 32 per cent over 12 months.