(2 September 2025 – Australia) Westpac’s new business banking boss, Paul Fowler, has hit back at criticism of his bank’s growth strategy by his former boss at Commonwealth Bank, saying the lenders are actually adopting very similar approaches to catching market leader National Australia Bank in the small business space.
CBA business banking boss Mike Vacy-Lyle last month accused Westpac and NAB of chasing growth with “unsustainable” pricing and looser lending standards, describing the strategy as “stupidity”.
“I would not use that language,” Fowler said in an interview before a briefing with analysts and investors on his strategy on Tuesday morning.
Fowler worked under Vacy-Lyle for four years, running CBA’s agribusiness operations, before he defected to Westpac in May to take on his old boss.
“I would say [the market] is highly competitive, and we are all on our toes. But I feel very comfortable about the balance we are achieving at the moment.”
NAB’s new business banking chief, Andrew Auerbach, also rejected Vacy-Lyle’s characterisation.
“Yes, it is a competitive environment for certain,” he said after NAB’s quarterly update last month. “[But] as I look at the business, I am very happy with the balance between growth and profitability.”
NAB has the largest share of business lending, with 21.61 per cent as of the end of July, according to data released by the Australian Prudential Regulation Authority on Friday.
CBA followed with 18.85 per cent, Westpac had 16.14 per cent and ANZ had 12.96 per cent.
However, over the past 12 months, Westpac and CBA have been steadily growing their business lending books. NAB recorded its highest-ever month of business lending in June, before growth eased in July. Over the past year, NAB and ANZ have lost ground.
Westpac has grown business lending at 1.5 times the system average, at 15 per cent year-on-year, to $186 billion, according to the regulator.
In the agribusiness, professional services and health sectors, Westpac has grown at more than 20 per cent. Fowler’s business and wealth division makes up 32 per cent of Westpac Group’s profit – more than the retail bank.
Fowler rejected Vacy-Lyle’s suggestion that Westpac was trying to attract new customers through pricing and said most of the loan growth was driven by lending to customers already using Westpac for business deposits or transaction banking.
A former investment banker, Fowler said there were further opportunities in lifting working capital lending to support small business cash flow, providing more foreign exchange services, and cross-selling mortgages to small business customers.
“Deeper relationships with our customers also make for more profitable relationships,” Fowler said. “What I saw at CBA, over the last four years, gives me a sense of the opportunity that lies ahead at Westpac.”
“We have broad relationships. There is an opportunity to go much deeper with our existing customer base.”
Vacy-Lyle has consistently said that CBA’s business lending strategy was focused on the “main bank” relationship, which provides a lower cost of funds through deposits, which then provide data-led insights to grow lending. Fowler has said he will adopt a similar approach.
Westpac is the second-largest bank after CBA based on the “main financial institution” metric, which focuses more on transaction accounts than loans, and NAB is third. Westpac has grown its MFI share by 125 basis points this calendar year to 19.4 per cent. CBA is at 27 per cent.
“We serve one in five businesses today,” Fowler said. “I would love that to be one in four, in due course. We want more Australian businesses to call us their main bank.”
However, other senior bankers said they were concerned that major banks were locked into a pricing war, like the one Vacy-Lyle described.
Judo Bank boss Chris Bayliss said some players were making risky business loans under a sales-focused culture, and accused them of recreating the infamous mortgage wars in the business sector, as home loan lending becomes increasingly commoditised.
“Until a couple of years ago, the banks were just obsessed with home loans …[but] we have moved to a business-led economy now, so the major banks have all fallen back in love with business banking,” Bayliss said after Judo reported earnings last month.
As an example of aggressive pricing in the market, he pointed to a Judo client lost to a major lender. Judo had priced a $50 million agricultural loan at 6 per cent over the swap rate, but a major bank (which he declined to name) priced it at 1.5 per cent. “That’s not the correct price for that risk. Pricing is not a strategy,” he said.