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The latest Monthly Authorised Deposit-taking Institution Statistics from the Australian Prudential Regulation Authority (APRA) showed lending to non-financial businesses increased by $19.3 billion over the month (+1.55 per cent) to $1.26 trillion.
The June increase was well above May’s $7.8 billion rise (+0.64 per cent) and March’s $15.5 billion increase (+1.28 per cent), making it the largest monthly increase since March 2020, when business lending surged by $33.5 billion as businesses sought additional funding amid the economic uncertainty created by COVID-19.
Over the past 12 months, lending to non-financial businesses has grown by $120.1 billion, an increase of 10.5 per cent.
Pressure persists despite lending growth
The six-year record posting follows what has been a challenging time for many businesses, as higher interest rates, regulatory changes, and increasing input costs add pressure to operations.
Many brokers on the ground have flagged increased pressure among their clients, noting a growing demand for cash flow solutions. What’s more, a study in May found that payment arrears had climbed to their highest level since January 2020, with more businesses struggling to pay invoices on time.
Pressures are more pronounced in regional areas, with close to three-quarters of regional small businesses reporting falling profits, and brokers saying many owners are now delaying investment and focusing on keeping their businesses afloat.
Nonetheless, National Australia Bank’s (NAB) most recent business confidence survey climbed into positive territory for the first time since 2022, as stronger profitability and employment helped lift sentiment across the economy.
Majors post robust growth
The major banks continued to account for the majority of business lending growth.
NAB retained its position as Australia’s largest lender to non-financial businesses, with its portfolio reaching $274.8 billion in June. The bank added $2.8 billion over the month (+1.0 per cent) and $27.0 billion over the year (+10.9 per cent).
The bank’s business and private banking division recorded its strongest June month since the financial year 2021–22 despite a slowdown in home loan applications.
Commonwealth Bank remained the second-largest business lender after recording the strongest monthly growth among the majors. Its portfolio increased by $4.2 billion (+1.7 per cent) during June to $245.0 billion, while annual growth reached $29.1 billion (+13.5 per cent).
Westpac’s business lending book expanded to $209.9 billion, following a $3.3 billion monthly increase (+1.6 per cent). Over the past 12 months, its portfolio grew by $25.9 billion (+14.1 per cent), the strongest annual growth rate among the major banks.
ANZ’s non-financial business lending reached $155.5 billion after increasing by $2.3 billion during June (+1.5 per cent). While the bank continued to trail its major bank peers in total business lending, its portfolio was $6.7 billion higher than a year earlier (+4.5 per cent).
APRA’s data show the four major banks held a combined $885.2 billion in lending to non-financial businesses at the end of June, representing just over 70 per cent of all ADI business lending.
Collectively, the majors added $12.6 billion in business lending during the month, accounting for around 65 per cent of all growth across the sector.
Mixed fortunes across the non-majors
Outside the major banks, Rabobank Australia remained the largest non-major lender to non-financial businesses, with a portfolio of $24.8 billion. The lender recorded one of the strongest monthly performances in the top 10, adding $1.7 billion during June (+7.2 per cent), while annual growth reached $1.1 billion (+4.8 per cent).
Bank of China continued to expand its commercial lending book, with balances rising to $23.6 billion after increasing by $599 million over the month (+2.6 per cent) and $3.6 billion over the year (+17.9 per cent).
Macquarie Bank remained Australia’s seventh-largest business lender, although its portfolio edged lower during June. Business lending slipped $132 million (-0.6 per cent) to $22.8 billion, despite remaining $2.4 billion higher than a year earlier (+11.9 per cent).
Sumitomo Mitsui Banking Corporation also recorded a monthly decline, with lending falling $482 million (-2.1 per cent) to $22.1 billion. The bank’s portfolio was down $3.4 billion over the year (-13.4 per cent).
MUFG Bank posted one of the strongest growth rates among the top 10 lenders. Its business lending portfolio climbed $1.3 billion during June (+6.6 per cent) to $21.2 billion, representing annual growth of $4.0 billion (+23.6 per cent).
Mizuho Bank rounded out the top 10 despite a modest monthly decline of $215 million (-1.2 per cent). Its portfolio stood at $17.8 billion, up $2.7 billion over the year (+17.6 per cent).
[Related: NAB flags ‘eye-watering’ rise in business input costs]
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