Australian Banks Fortnightly Money in the Bank: Issue #25

Research evidence excerpt

Australian Banks Fortnightly Money in the Bank: Issue #25

Australian Banks Fortnightly UBS Research

Monthly asset and liability pricing: competitive landscape

Below we present our monthly asset (loans) and liability (deposits) pricing data, providing a near-real-time glimpse into market

competitiveness. Broadly, market competitive forces have decreased in the past ~18 months, however there is still dispersion in

pricing among lenders. Key points that stand out to us:

Deposits: Macquarie, ING Bank and Suncorp continue to list the most competitive deposit pricing out to 12 months.

Macquarie is growing strongly in deposits month-on-month (here), however Neutral-rated Judo's recent deposit offerings is

providing a better funding mix as the bank continues to scale. BOQ also has much sharper deposit pricing compared to peer

Bendigo, with deposit growth a key pillar for BOQ's return to above cost of capital economics.

Dispersion in changes in deposit pricing over time is larger than for mortgages, indicating slightly different pricing and

competitive dynamics on both sides of the balance sheet. 12-month deposit pricing appears to be garnering key pricing

pressure compared to 9 and 24 month offerings.

Mortgages: The majors are all pricing at similar and elevated levels (~7.5%) compared to non-major peers who are offering

lower mortgage pricing. Macquarie and ING typically offer similar mortgage pricing at the most competitive end of tracked

offerings. In May, ING had the most competitive pricing. We note, ING has been growing particularly strong in investor

mortgages (+46% YoY vs MQG's +32% YoY).

ANZ, NAB and St. George offered the least competitive mortgage rates in the market which is supportive of NIM (combined