Westpac is pushing ahead with its controversial plan to draw on its wide range of brands to target customers who do not want to bank with one of the majors.
With credit growth slowing, Westpac's strategy of promoting a large number of brands has attracted criticism from some analysts, who say it risks being inefficient and expensive. The strategy is also opposed by credit unions, which argue that it hurts competition.
But the head of the Australian Financial Services division, Brian Hartzer, defended the "multi-brand" approach, saying it was a key plank of its plan to extract growth in a slower environment.
In his first analyst briefing since starting at the bank last year, Mr Hartzer said its stable of brands, including St George, Bank SA, Bank of Melbourne, and RAMS, played a key role in the bank's response to a "challenging" external market.
"We know from research that there's a good chunk of the population that for whatever reason doesn't want to bank with a big bank," he said on Tuesday.
"Our view is by having alternate brands available to us we're able to put an offer in front of a bigger portion of the potential profit pool than we would if we were limited to just the one brand."
Mr Hartzer, a former head of ANZ's retail bank who has been tipped as a likely successor to chief executive Gail Kelly, said the bank was defining each of its brands so they did not compete with other Westpac offerings.
"The trick is to make sure that as much as possible those brands are complementing each other rather than just competing head to head with each other," he said.
Mr Hartzer argued that Bank of Melbourne, which Westpac has launched in an attempt to expand its presence in Victoria, was proof the strategy was paying off.
In the year to December he said Bank of Melbourne's deposits had grown at more than four times the pace of the market, while credit had grown at twice the industry pace.
The St George franchise is also targeting business lending, where it has a market share of just 8 per cent, compared with a consumer market share of 12 per cent.
A report by Nomura analyst Victor German last year found relatively few banks in Australia or overseas used multi-brand strategies. It said consumers tended to be more concerned with price than brand when buying financial services.
Credit unions and mutual banks have also called for tougher disclosure rules in response to multi-branding strategies. They argue the practice hurts competition, because customers are unaware they are using a big bank.
Mr Hartzer also said the bank would continue to chase customer deposits aggressively.
Elizabeth Knight— Page 34