Big Four banks post a modest jump in small business lending

Posted: 9 May 2017 4:27 pm
small business lending

small business lending

The latest trading updates from Australia's major banks show how they're faring in small business finance.

The Big Four have been posting quarterly or half-yearly profits this week, offering an insight into small business lending at the larger end of town. This is interesting, given the tense climate stemming from the banks' treatment of small businesses, brought to light at Parliamentary Inquiries and industry events.

CommBank, which saw its cash earnings lift to $2.4 billion in Q3 17 (statutory net profit at $2.6 billion), reported a 3.7% lift in business lending. This is a 0.3% growth in business lending volume in the previous 12 months to March 2017, growth which was not as strong as its other sectors.

"Business lending growth overall remained subdued, with the strongest growth in business and private banking," CommBank said.

NAB announced a half-yearly profit of $2.55 billion in H1 17 (statutory net earnings) – this compared to a loss of $1.74 billion for the March 2016 half year. Cash earnings were up 2.3% to $3.29 billion.

The bank's business and private banking cash earnings grew by 2.5% to $1,368 million, which reflected "sound revenue growth and tight cost management", according to a statement.

ANZ posted a profit for the half year ending March, increasing statutory profits 6% to $2.9 billion. The bank posted a cash profit of $2.4 billion, which was a noticeable 23% higher than the previous period. The bank announced that small business lending had increased 4% in Australia and 8% in New Zealand.

ANZ's chief executive Shane Elliot said the bank was growing prudently in home lending and also through a targeted focus on the small business segment.

"To support small businesses, we launched innovative digital solutions such as ANZ BladePay and ANZ Be Trade Ready," Elliot said.

Westpac saw a 6% increase in statutory net profits to $3,907 million in H1 17, with cash earnings up 3% to $4,017 million. This comprised an increase in business cash earnings, up 3% from H1 16 to $1,008 million.

Despite increased lending among banks, criticism of the banks' treatment of small businesses persists.

However, the Big Four are committed to changing their small business lending practices. NAB, Westpac, CommBank and NAB all recently committed to changing their business loan contracts to remove non-monetary default clauses, as well as agreeing to simplify loan contracts.

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