The nation’s largest customer-owned bank predicted a fresh round of competition would be extremely challenging for lenders.
While good for consumers, it presents a challenge for banks nursing wounded margins.Heritage Bank chief executive Peter Lock says “the mortgage wars are not over” and is bracing for a fresh competitive push from Commonwealth Bank after its market share declined in July and August.
Net interest margins are industry shorthand for the difference between the interest that banks pay depositors and receive from borrowers, and is a core measure of profitability. The big four banks have all reported falling NIMs over the first half of the year, despite the Reserve Bank’s increases to official interest rates.
Mr Lock said while the merger was still in the early stages, it was delivering profit growth despite $24.4 million in integration costs during the financial year.“We’ve not only grown our membership, lending, deposits and assets, we’ve also maintained high levels of customer satisfaction, built a strong values-based employee culture and delivered a solid profit despite the costs of integration,” he said.
“Winning and keeping business hinges on four main factors: pricing; efficiency; end-to-end processing; and product and service features. Loyalty, a traditional strength that mutual lenders have leveraged, has eroded significantly,” Ms Barrett said. She said mergers were “compelling” for mutual lenders to “reduce their cost base and invest in technology” so they did not get left behind by bigger players. It would also give them a chance to cut down expensive branch networks and reinvest in their systems.
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