St George and Bankwest have defied sceptics by continuing to acquire retail customers post their respective takeovers by Westpac and CBA.

Many banking pundits at the time of the mergers forecast a customer exodus from the St George and Bankwest brands in protest of banking with one of the big four, yet the opposite has happened.

The St George mortgage book increased by $11 billion, or an above system 15%, to $85.5 billion during 2009 – an extremely strong result considering more than half of all mortgages under the brand are domiciled in New South Wales.

Bankwest proved even more successful in mortgage acquisition, with the mortgage book jumping $8.6 billion, or 29%, to $38 billion during 2009 as the bank continues to heavily promote the 1% discount to the big four standard variable Rate Tracker product.

As a result, CBA mortgage market share increased to 25.9%, or $280 billion, (CBA 22.4% and Bankwest 3.5%) by the end of 2009, with Westpac claiming 24.1%, or $260 billion, (Westpac 16.2% and St George 7.9%).

The ‘big two’ Australian banks combined therefore now hold $540 billion, or 50.0%, of all outstanding mortgages in Australia, with market share continuing to increase each quarter.

And this market share dominance is not limited to mortgages. These two banking goliaths also control retail deposit market share, which in itself is a cheap funding source for lending portfolios.

CBA, with $140 billion in retail deposits or 27.6% market share, (including $14 billion from Bankwest) continues to control the cash market in Australia, with Westpac a clear second with $106 billion, or 20.8% market share, (including $40 billion from St George).

The ‘big two’ combined hold 47.4% of Australian retail deposits, which continues to increase, underpinning the lack of competition in Australian retail banking.

*Market share analysis sourced from the CoreData Australian Mortgage Report and Australian Cash Report, Q1 2010.