The Australian mortgage market is experiencing notable shifts, particularly with ANZ Group Holdings Ltd (ASX: ANZ) making significant strides in recent months. ANZ's shares have increased nearly 13% this year, trading at $29.24 as of Friday. This performance follows ANZ's completion of a substantial $4.9 billion acquisition of Suncorp's banking arm, an ASX banking stock, which has allowed it to gain significant market share in mortgage lending.
ANZ’s Elevated Market Position With the acquisition of Suncorp Bank, ANZ has now become Australia's third-largest mortgage lender, surpassing National Australia Bank Ltd (ASX: NAB). This advancement has allowed ANZ to increase its market share to 15.96%, according to recent reports. This strategic move has not only expanded ANZ's footprint in the Queensland market but also positioned it to compete more effectively nationwide.
The increased market share is expected to drive higher revenue for ANZ, as capturing market share from competitors generally results in greater earnings potential. Higher revenues often translate into increased earnings per share (EPS), which can positively impact stock prices. Analysts have adjusted their earnings forecasts for ANZ in light of the acquisition, noting that integration costs will be spread over five years and revising EPS estimates upward for FY24 and FY25.
Challenges for NAB In contrast, National Australia Bank has faced difficulties in maintaining its position. Although NAB's market share has declined, the bank has seen a 20% increase in its share price this year. The reduction in NAB’s market share is attributed to a lag in growth compared to the overall market, with its share falling to approximately 14.5%, the lowest since 2021.
NAB's CEO has acknowledged the bank's strategic shift towards more profitable areas, indicating a pullback from less lucrative mortgage products. This approach reflects a broader effort to enhance returns on shareholder capital, despite the increased lending activity in the market.
Market Implications The contrasting trajectories of ANZ and NAB highlight ongoing changes in the Australian mortgage sector. ANZ’s successful acquisition and expanded market share have positioned it favorably, potentially leading to increased revenue and earnings. Meanwhile, NAB’s strategic adjustments reflect its efforts to focus on higher-margin business areas amid a competitive landscape.
Investors should stay informed about these developments and consider the implications for their investment strategies in the evolving mortgage market.