The National Australia Bank Ltd (ASX: NAB) share price could keep falling according to a new report.
NAB is one of the four largest financial institutions in Australia in terms of market capitalisation, earnings and customers. However, in 2018, it was Australia’s largest lender to businesses and has operations in wealth management and residential lending.
Here’s Why The NAB Share Price Could Keep Falling
Most of the ASX banks, including NAB, rely on mortgage broker groups for a sizeable part of their loan volumes.
According to Australian Financial Review reporting, brokers within the country’s biggest broker business Australian Finance Group Ltd (ASX: AFG) have said that NAB is losing market share of people who are trying to refinance, with the share falling from 8.5% to 4%.
The brokers claim NAB is now needing to throw in some added benefits to try to turn things.
Why Is NAB Losing Market Share?
There are a variety of factors that could be the cause of NAB’s troubles. The interest rate hike at the start of the year didn’t go down so well, it is taking longer to approve loans, the loss of the NAB CEO and Chairman may have been a confidence breaker and the Royal Commission didn’t help.
It could be long term bad news if NAB is losing out to Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA).
Loans are 20-year or 30-year products, so losing out these loans could affect many years of future reports, although these loans are only a small part of earnings at the moment.
However, NAB does not fully agree with the conclusion of the AFG brokers. The major ASX bank said that it has strongly improved its customer retention rate and compared to its big four peers it has achieved the most over the past year in terms of home loan market share.
It’s news like this that makes it hard for me to commit to a long term bank investment. Loans are increasingly commodity products that are easily compared and a bank can lose market share if the loan isn’t cheap enough.
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.