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In an ASX briefing on its June quarter results, National Australia Bank (NAB) reported that business lending balances rose 4 per cent over the June quarter, while home lending balances within the business and private banking division (BPBD) increased 2 per cent.
However, the value of home lending applications fell 9 per cent compared with the previous quarter. Across the bank, NAB revealed that total Australian home lending applications dropped 15 per cent over the same period.
NAB group executive of BPBD, Andrew Auerbach, said the division had “continued to perform well in a challenging economic environment”.
“It’s pleasing to see the resilience of our business customers who continue to find opportunities to grow and innovate.”
Business lending continues to outperform
According to NAB, business lending balances are now 10 per cent higher than the same time last year, with growth recorded across a broad range of industries.
The bank said the June result marked its strongest month for business lending since FY21–22, with its lending pipeline remaining broadly in line with the previous corresponding period.
NAB also highlighted continued momentum in business deposits, which increased 1 per cent over the quarter and 9 per cent year-on-year, despite the June quarter typically being a seasonally softer period.
Recently, NAB's business confidence survey climbed into positive territory for the first time since 2022, as stronger profitability and employment helped lift sentiment across the economy.
This follows a stark drop earlier in the year, when conflict in the Middle East triggered the second-largest fall in business confidence in the survey’s history, despite underlying business conditions remaining relatively resilient.
In the report, the bank highlighted agri-lending as a key part of its long-term growth.
NAB found that agri-lending growth had outpaced total business lending growth over the five years to May 2026. While total business lending has grown by 57 per cent in this period, agri, forestry and fishing grew by 65 per cent.
NAB said that with 25,000 agri customers, it now facilitates one in three agri loans and one in four farm management deposits.
Housing demand cools
While business lending remained resilient, NAB’s residential lending data pointed to softer borrower demand.
Home lending balances within BPBD still increased 2 per cent over the June quarter, but the value of new home loan applications fell 9 per cent compared with the previous quarter.
Across NAB’s Australian operations, total home lending applications declined 15 per cent over the same period.
Indeed, reports from others have also recorded significant drops in home loan applications.
Broker group Loan Market found mortgage applications had fallen 26 per cent by volume and 23 per cent by value between early February 2026 and the end of June.
Credit quality remains resilient
NAB also reported an improvement in asset quality during the June quarter, with the ratio of non-performing loans falling from 3.00 per cent in March to 2.91 per cent in June.
However, the bank said “watch loans” increased by 8 per cent over the quarter, reflecting the current operating environment and potential impacts from ongoing economic uncertainty.
Construction and transport and storage were identified as sectors experiencing continued deterioration, while NAB said it was maintaining regular contact with customers and monitoring early warning signs, including covenant breaches and slower payments.
[Related: Investor split emerges as mortgage demand cools]
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