Who are the biggest banks in Australia?

When choosing a financial institution for your banking needs, it’s useful to know who the major players are in the Australian banking landscape.

The decision on which bank to park your cash, or take out a loan with really depends on your own situation and what you value. If you are looking for easy access to your money through ATMs and value the opportunity to visit a local branch and chat with a staff member, a bigger bank might be what you’re after.

If you are more focused on earning interest on a savings account or term deposit, then smaller banks may offer a better rate as they have to be competitive to attract customers. Similarly, if you’re looking for a local banking experience that gives back to the community, credit unions or customer-owned banks are typically more prolific with these initiatives.

The table below features a selection of home loan products for both owner occupiers and investors across some of the largest banks in Australia.

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Who are the big four banks?

You might hear about “the big four” or “the big four banks.” This refers to Commonwealth Bank of Australia (CBA), Westpac Banking Corporation (WBC), National Australia Bank (NAB), and Australian & New Zealand Banking Group (ANZ).

These banks must abide by what’s called the ‘four pillars policy’. This policy essentially bans these four banks from ever merging. They are also incredibly large banks.

In terms of total assets held as at the end of 2021, according to the Australian Prudential Regulation Authority, the ranking of the big four were:

1. CBA - $960.751 billion

2. WBC - $901.329 billion

3. NAB - $766.063 billion

4. ANZ - $642.298 billion

This means they collectively hold assets worth nearly $3.3 trillion. A lot of this is tied up in home lending. It’s estimated these four major banks account for up to 80% of the value of home lending in Australia. They also have a strong presence in New Zealand.

Top 10 Australian Banks - Market Capitalisation

A commonly accepted way to measure the size of a public company is through market capitalisation, or market cap. This is calculated by multiplying the price of a stock by the total number of outstanding shares. The big four banks dominate the Australian Securities Exchange (ASX) in terms of market capitalisation.

The top ten banks in terms of market cap are, at the time of writing:

1. CBA - $175.6bn

2. NAB - $104.2bn

3. WBC - $84.2bn

4. MQG - $77.59bn

5. ANZ - $76.4bn

6. BEN (Bendigo Bank) - $5.9bn

7. BOQ (Bank of Queensland) - $5.1bn

8. VUK (Virgin Money) - $2.55bn

9. BFL (BSP Financial Group) - $2.3bn

10. JDO (Judo Bank) - $1.8bn

However, measuring through market cap can be a fickle beast - share prices can and do change daily. In addition, many international brands have a significant footing in the Australian banking landscape, including HSBC (UK), and ING (Netherlands) and aren’t necessarily listed in Australia.

Macquarie - making the ‘big four’ the ‘big five’?

Macquarie Bank Limited (MQG) has risen to become one of the largest banks in Australia, and in terms of market cap, it’s larger than some of the big four banks. In late 2021, Macquarie Group Limited hit a market cap of $77.5 billion according to Bloomberg, making it bigger in this regard than ANZ and Westpac.

This potentially makes Australia’s banking landscape dominated by ‘the big five’, however Macquarie is not subject to the four pillars policy. Macquarie also has less of a retail banking presence than the other major banks, and sources a lot of its revenue from its investment banking arm, and through international ventures and asset management.

Top 10 biggest banks by size of home lending to owner-occupiers

Source: APRA Monthly Authorised Deposit-taking Institution Statistics - March 2022.

Top 10 biggest banks by size of home lending to investors

Source: APRA Monthly Authorised Deposit-taking Institution Statistics - March 2022.

Top 10 biggest banks by size of household deposits held

Source: APRA Monthly Authorised Deposit-taking Institution Statistics - March 2022.

The argument for banking with major banks

• Access to your money - Although digital banking is now used more than cash, banking with the big four will mean easier access to ATMs for withdrawing and depositing cash.

• Visit a local branch - The bigger banks offer the most active branches to get assistance with your banking. Many smaller banks have entirely online services, meaning you can’t visit a branch in your area or speak to a staff member for help with your banking.

• Customer service - Whether in Australia or overseas, you’ll likely have access to customer service with a major bank. Many smaller banks have no dedicated customer service phone number or in person services.

• A holistic banking experience - Many major banks can be your one-stop shop for everything from banking, insurance, financial advice, share trading, asset management and more. Smaller banks might not be able to compete with this level of in-depth service.

The argument for banking with a smaller bank

• Better deals - Due to the popularity of the big four, smaller banks will often offer better rates on savings accounts, and home loan products in an effort to attract customers. Shopping around can often save you money by finding a great deal with a smaller financial institution.

• Lower fees - Smaller banks reduce their overhead by digitising their customer service and other services. These cuts often filter through to their customers. The bigger banks have branches all over the country, with huge numbers of staff, this means higher costs which can lead to higher fees for their customers.

• Faster turnaround times - Major banks often have a lot going on, and may take longer to process your home loan application. Smaller banks may pride themselves on faster turnaround times enabling you to get approved for products sooner.

• Apps - While the big four banks have pretty swish apps, smaller banks such as neobanks pride themselves on their user experience. In these apps you’ll often find money management tools, unique insights and other slick capabilities that other banks' apps may not have developed.

Top 10 Largest Customer Owned Banks

Customer-owned, or mutual banks mean customers have an equal shareholding of the bank. This is regardless of the size of their loan or deposits, and these banks do not have shareholders. Customer-owned banks typically also include credit unions and building societies, and were often founded out of providing banking services to a particular profession e.g. scientists, teachers, police and so on.

Source: Australian Prudential Regulation Authority, March 2022 ADI Statistics

Customer-owned banks are generally much smaller than big banks, but various mergers over the years mean some have formed a formidable footing in the Australian banking landscape.

The table below displays a range of home loans for owner occupiers from customer-owned institutions.

What about a non-bank lender?

If you are considering taking out a home loan, car loan or other loan product, there are other financial institutions that provide these services. Non-bank lenders offer a legitimate alternative to traditional banks and have created a competitive environment which provides more choice for the consumer.

The table below features a selection of home loans from non-bank lenders.

Advertisement

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

Product Features

• Fast turnaround times, can meet 30-day settlement
• For purchase and refinance, min 20% deposit
• No ongoing or monthly fees, add offset for 0.10%

Monthly repayments:$1,499

2.10%Advertised Rate (p.a.)

2.46%Comparison Rate*

More details

Image by James Wainscoat via Unsplash