It will be difficult for National Australia Bank Ltd (NAB) to expand its retail loan portfolio. A similar campaign by its New Zealand subsidiary has already failed. Data published recently has revealed that the bank is yet to increase its market share from its aggressive discounting of home loans.

As per the data supplied by the Australian Prudential Regulation Authority, its share of the residential mortgages in April was 14.3%. It proved that the bank lags behind its banking rivals in the market. It is being compared to its Bank of New Zealand (BNZ) subsidiary as it launched a similar sharply priced mortgage campaign in 2004.

Before launching this campaign, BNZ was a small and insignificant player in the banking market. After it decided to launch this campaign to increase loan volume through heavily discounted mortgages, it put a significant pressure on non-bank lenders. This helped the bank to decrease the loss of market share for some time but eventually it did not proved very helpful.

National Australia Bank Ltd (NAB) also launched a fee cut aimed at under cutting competitors in the home loan market in February. But as a result of this campaign, the bank’s personal banking division suffered a 22% drop in first half fiscal 2010 to $317 million.

National Australia Bank Ltd (NAB) is still Australia’s biggest business lender and commands a market share of 19.2%.