Big four recoup market share

Report shows majors have "turned a corner" after losing over 10% to smaller lenders in FY19

Big four recoup market share


By Madison Utley

Australia’s big four banks have reclaimed market share in the commercial lending space after ceding 12% to non-major lenders in FY19, according to the latest FAST Business Lending Index Report.

While the aggregator found that business lending for the quarter to 31 December 2019 was down 9.4% to $1.25bn year on year across all lenders, smaller institutions felt the crunch more acutely than their larger counterparts.

“In our last report we cautioned that the large lenders wouldn’t sit on their hands. This has proven to be correct and the major banks are now firmly back in the game with sharp pricing and conditions, particularly for commercial property loans,” said FAST CEO Brendan Wright.  

“Competition in the business and commercial lending remains strong. Complexity continues to characterise the market and experienced brokers are therefore essential to delivering sound credit advice and good outcomes for their business clients.”

While smaller lenders grew their market share from 24% to 40% in FY19, FAST's most recent data shows it fell to 35% in the final three months of last calendar year. The sector recorded a 20% decline in settlements over the period to $437m.

The major banks now have a 65% share of the business and commercial lending market, settling $817m over the December FY20 quarter.

The FAST report attributed the weaker figures over the three month period to the seasonality of the market, with the September quarter typically busier than the December.

“June to September is typically the busiest quarter for commercial lending as businesses are in full swing, applications lodged earlier in the year are being settled and the start of a new financial year brings fresh energy to the market,” Wright said.

“Competition remains red hot in the commercial lending space, with business lending seeing highly competitive rates almost as low as those seen in the home loan market.

“[However] while competition remains fierce, the latest findings reflect a broader downturn in business lending in the Australian economy. We anticipate that this slowdown will continue as the impact of the bushfires and coronavirus weigh on sentiment," the CEO highlighted.

“The economic impact of these challenges is only now being quantified and we expect to see that reflected in the next quarterly data to come out of the FAST Business Lending Index.”

FAST launched its inaugural report in November 2019, aggregating data from 24 business lenders.

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