Westpac outlines strategy to increase market share

WESTPAC will make a play for a bigger slice of the market in deposits, small-to-medium business lending and wealth management to deliver revenue growth in the face of a rapidly slowing banking environment.

WESTPAC will make a play for a bigger slice of the market in deposits, small-to-medium business lending and wealth management to deliver revenue growth in the face of a rapidly slowing banking environment.

The plan to boost the bank's share of these markets is expected to be mapped out by its chief executive, Gail Kelly, when she hands down the first-half profit results early next month.

It also forms the heart of the strategy for Westpac's new Australian Financial Services unit, which houses the bulk of the bank's domestic retail banking and wealth businesses.

Despite rising doubts among some investors about Westpac's commitment to supporting myriad brands, Mrs Kelly is expected to argue the multi-brand strategy is a vital plank in growing share of the banking businesses.

Dubbed internally by Westpac executives as "one-in-four", the strategy aims to lift the bank's market share across a range of products to match the bank's broader 25 per cent section of the Australian market.

One of Mrs Kelly's most senior group executives, Peter Hanlon, has been asked to oversee the project as well as provide the groundwork for the formation of the Australian Financial Services businesses, which take in St George, Westpac's retail brands and BT Wealth.

"Accepting the fact there is low growth in some areas, there's two things we can do: look for areas of higher growth and look for areas where we are under-penetrated," Mr Hanlon told BusinessDay.

"I look at these other product sets because that to me is where the revenue is going to come from."

The move also shows how banks have been forced to adjust to a new environment where credit growth is forecast to remain subdued for the next few years.

Since the onset of the global financial crisis, businesses and consumers have taken a more cautious approach to borrowing and are working to sharply reduce leverage.

This is forcing banks to make their existing franchise more productive at the same time as reducing costs.

Westpac and rival ANZ have both outlined cuts which will result in the loss of hundreds of jobs.

Among internal targets mapped out by Westpac, the bank is planning to hold its position at between 24 per cent and 26 per cent of the mortgage market.

However, it is planning to boost its share of deposits from the low 20 per cent range and expects to lift its share of lending to small and mid-sized business to 25 per cent from about 20 per cent. Small business transactions, such as deposits, will also be targeted.

Westpac has set an aspirational target of a 15 per cent share of the country's $1300 billion-plus superannuation and investment market over time. This would represent a substantial jump on the bank's current 5 per cent share of the market.

"To go to 15 per cent of what will be a much bigger number over the next five to seven years - well that's a prize worth going after," Mr Hanlon said.

While the bulk of transactional banking is moving online, Mr Hanlon said the bank's 1000-plus branch network was important for the market share boost because branches were increasingly handling more complex queries.

He said over the next few years staffing inside branches would change to reflect the bank's focus on growth areas, including more wealth management and business specialists.

However, the Westpac move is expected to face stiff resistance from rivals including market heavyweight Commonwealth Bank, which has already spent billions of dollars on cutting-edge technology that it believes will help it win more business customers.