Building Societies in Australia Industry Market Research Report Now Updated by IBISWorld

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With the economy transitioning from mining to non-mining sectors, low interest rates are expected to prevail, constraining industry revenue. For these reasons, industry research firm IBISWorld has updated its report on the Building Societies industry in Australia.

IBISWorld Market Research

IBISWorld Market Research

Low interest rates have hampered industry revenue growth.

The Building Societies industry is being pulled apart brick by brick. Although it emerged from the financial crisis relatively unscathed compared with other lending institutions, the low interest rate environment and high competition from national banks have had a detrimental effect on revenue. Industry revenue is expected to decline at an annualised 6.5% over the five years through 2013-14 to reach $1.3 billion. Changes to official interest rates are a key component in determining industry revenue. Over the past five years, the government tried to stimulate economic growth and reduced interest rates to a historic low of 2.5%. This meant that the interest generated by Building Societies on their loan books also plummeted. In 2013-14, revenue is expected to decline further by 9.1%. Nevertheless, profitability is expected to improve with interest expense declining faster than interest revenue.

The industry is characterised by its high competition, high market share concentration and the declining phase of its life cycle. Building societies provide a far narrower range of services than national banks with revenue predominantly generated through residential lending, while business lending activity is relatively small. Over the past five years, the industry increased its exposure to mortgages in light of lower interest rates. This also meant raising more funds from depositors. Pressure to remain competitive in a rising cost environment has caused industry consolidation, as a number of mergers and takeovers have occurred. The number of building societies has declined to just nine in the past five years. IBISWorld industry analyst Andrei Ivanov states “ongoing competitive pressure from national banks is expected to force several more building societies to exit the industry, causing industry employment and establishment numbers to drop.” As a result, the next five years do not look promising for the industry. According to Ivanov, “weak economic prospects as the economy transitions from mining to non-mining sectors are expected to result in a continued period of low interest rates, which will further hamper revenue growth.”

The Building Societies industry exhibits a high level of market share concentration. Market share concentration increased over the past five years and this trend is expected to continue into the future. The primary reason behind the high level of concentration is the continuing exits of building societies from the industry, coupled with merger and acquisition activity of the remaining players. In 2008, Mackay Permanent Building Society was bought by Wide Bay Building Society, while Pioneer Permanent Building Society was acquired by BOQ in 2007. These mergers and acquisitions have increased the concentration level of the industry, with only nine industry players now remaining. IBISWorld expects continued consolidation within the industry, which will likely increase the level of concentration in the future. The industry’s major players include Newcastle Building Society, IMB and Wide Bay Australia. For more information, visit IBISWorld’s Building Societies report in Australia industry page.

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IBISWorld industry Report Key Topics

This industry comprises businesses that take deposits and provide loans for home building or purchasing purposes.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Industry Globalisation
Major Companies
Operating Conditions
Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit or call (03) 9655 3886.

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Gavin Smith
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