CBA experiences above market growth
(31 May 2010 – Australia) The Commonwealth Bank of Australia has said that increasing competition has an effect on the group’s small business lending margins, despite growing the business at a rate ten times faster than its competitors.
With 130,000 customers now on its small business lending book, which covers loans under A$2 million, Commonwealth bank has now hit the A$25 million mark.
Previously this market was dominated by Australia and New Zealand Banking Group and National Australia Bank, however after experiencing 8.3 percent growth in this market over the last next Commonwealth is on its way to the top.
Market-wide the growth for the overall small business market, which predominately includes the big four, only grew by 0.3 percent in comparison.
Ian Narev, executive general manager small business banking at the Commonwealth Bank of Australia, told The Australian newspaper that the bank would aim to boost its market share by competing on loan pricing.
CBA has been 30 to 80 basis points cheaper than its competitors, Mr Narev highlighted.
The bank hasn’t changed its approach to lending to small business, nothing has changed in terms of appetite or pricing, and CBA doesn’t plan to change either of those, Mr Narev added.
However, this will depend on what competitors might do and what demand will be, the bank’s position to be determined by both, Mr Narev noted.
The Commonwealth Bank of Australia currently has the most competitive rate of the big four lenders at 7.86 percent for its small business residential-secured loan.
Its market peers currently range from 8.68 percent to 9.12 percent.
The bank’s executive also said the bank does not anticipate competition in the market easing, adding that the others had been pretty aggressive.
This will affect margins, Mr Narev added.
Mr Narev also said the he would describe demand for finance as patchy but robust, adding that appetite to borrow to fund business growth could be weaker.
Previously this market was dominated by Australia and New Zealand Banking Group and National Australia Bank, however after experiencing 8.3 percent growth in this market over the last next Commonwealth is on its way to the top.
Market-wide the growth for the overall small business market, which predominately includes the big four, only grew by 0.3 percent in comparison.
Ian Narev, executive general manager small business banking at the Commonwealth Bank of Australia, told The Australian newspaper that the bank would aim to boost its market share by competing on loan pricing.
CBA has been 30 to 80 basis points cheaper than its competitors, Mr Narev highlighted.
The bank hasn’t changed its approach to lending to small business, nothing has changed in terms of appetite or pricing, and CBA doesn’t plan to change either of those, Mr Narev added.
However, this will depend on what competitors might do and what demand will be, the bank’s position to be determined by both, Mr Narev noted.
The Commonwealth Bank of Australia currently has the most competitive rate of the big four lenders at 7.86 percent for its small business residential-secured loan.
Its market peers currently range from 8.68 percent to 9.12 percent.
The bank’s executive also said the bank does not anticipate competition in the market easing, adding that the others had been pretty aggressive.
This will affect margins, Mr Narev added.
Mr Narev also said the he would describe demand for finance as patchy but robust, adding that appetite to borrow to fund business growth could be weaker.
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