​Asian lenders target Australian market, drive credit growth

by 10 Feb 2014
A Japanese lender has announced its plans to target the Australian commercial market as statistics show Asian banks have increased their share of business credit.

Mizuho Bank, Japan’s third largest lender by market value, is looking to top last year’s $2.5bn of syndicated loans in Australia by growing its commercial property lending.

Sydney branch general manager Debra Hazelton told Bloomberg Mizuho wants to broaden its Australian business amid heightened rivalry in local lending, as a cooling mining boom slows the economy.

We would like to be more active in some parts of the property market,” says Hazelton. “Not retail residential, but commercial real estate that is somehow in our already established customers’ portfolios”

According to the latest RBA Statement on Monetary Policy, Asian banks increased their share of total business credit in Australia to 7.5% in December 2013, up from just 4% in 2008.

“Much of the growth in business credit over the past year was driven by lending by Asian banks operating in Australia,” said the report.

“However, the overall rate of growth in business credit remains low, consistent with subdued investment intentions despite some surveys indicating improved business conditions.”

Housing loan approvals are currently 5% higher than the previous mid-2007 peak, found the report, underpinned mostly by loans to investors and repeat-buyer-owner-occupiers.

“Loan approvals for purchases of dwellings in New South Wales by investors continue to be particularly strong. With the value of first home buyer loan approvals at historically low levels, the small share of first home buyer approvals is likely to have held down housing credit growth.”

The average rate on outstanding home loans continued to fall throughout the year as borrowers refinanced at lower rates, and the average interest rate now sits at around 30 basis points lower than the previous low in September 2009.

“Lenders’ standard variable rates have remained largely unchanged since the last reduction in the cash rate target in August, although some lenders have altered their advertised package discount rates amid ongoing mortgage competition,” said the report.

“Many lenders continued to advertise special offers to new customers, including fee waivers and additional discounts on rates for a limited time.”

The value of outstanding personal credit increased slightly over the December quarter, found the report. The stock of fixed-term loans continued to increase, supported by ongoing strength in credit extended by car finance companies.

“Notwithstanding the rise in equity prices over the second half of 2013, preliminary data from the RBA’s December quarter margin lending survey suggest that the value of margin loans outstanding remains less than one-third of its pre-crisis peak.”