Business lending market gathers momentum

Growth in lenders' business credit portfolios last year was modest, compared with growth in mortgage balances, but an encouraging sign for lenders is that the rate of growth doubled during 2014.

According to Reserve Bank financial aggregates released on Friday, business credit balances grew by 4.8 per cent over the 12 months to December. Lenders' mortgage balances grew by 7.1 per cent over the same period.

Back in December 2013, 12 month growth in business credit balances was 1.6 per cent. From that point the growth rate increased steadily throughout 2014.

The market is a long way off the boom years of 2007 and 2008, when growth was over 20 per cent, but it has picked up momentum.

The Australian Prudential Regulation Authority's latest banking statistics show that a number of lenders chased market share in business lending and increased the size of their books well above system.

ANZ's business lending book grew by 7.6 per cent over the 12 months to December, while Commonwealth Bank's grew by 3.6 per cent, National Australia Bank's by six per cent and Westpac's by 13.4 per cent.

Among smaller lenders, AMP Bank's business lending book grew by 37.9 per cent over the same period, Bank of Queensland's by 10.2 per cent, Bendigo and Adelaide Bank's by 17.8 per cent, ING Direct by 15.1 per cent and Laiki Bank's by 24.4 per cent.