According to the latest FAST Business Lending Index Report, comprising data from 24 business lenders, while small lenders increased market share in the commercial lending space from 24 per cent to 40 per cent in FY19, this has since come back to 35 per cent in the final three months of 2019.
Large lenders now have a 65 per cent share of the business and commercial lending market.
FAST revealed that large lenders settled $817 million over the December FY19 quarter, down by 2.6 per cent on the same quarter a year prior.
However, smaller lenders recorded a 20 per cent decline in settlements over the period to $437 million, and non-bank settlements fell by 25 per cent to $190 million from $143 million a year prior.
“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.”
However, Mr Wright also noted that business conditions softened in the three months to 31 December 2019.
“While competition remains fierce, the latest FAST Business Lending Index findings reflect a broader downturn in business lending in the Australian economy,” he said.
“We anticipate that this slowdown will continue as the impact of the bushfires and the coronavirus weigh on sentiment.”
While the figures from the latest FAST Business Lending Index record the final three months of last year, the impact of the bushfires and the coronavirus are yet to be fully reflected in the data.
Mr Wright explained that businesses across Australia are now feeling the force of these events, which he predicts could have a negative effect on commercial lending volumes over the next quarter.
“The catastrophic bushfires that started back in October have impacted the lives of thousands of Australians, including their businesses. The scale of destruction these bushfires have caused is tragic,” he said.
“Coupled with the growing concern from the coronavirus, the economy is facing some significant challenges.
“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.”