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NAB reported business lending growth of 2 per cent over the quarter and 7 per cent year on year, including 3 per cent quarterly growth in its business and private banking division.
At the latest NAB economics webinar, chief economist Sally Auld said business lending remained strong for the bank, particularly surrounding the purchase of commercial buildings.
“We’re a big lender to small and medium-sized businesses, and we’re doing a lot of work to understand where that lending is showing up in the economy,” Auld said.
“What we do falls mainly into property and agriculture, they’re the two biggest sectors. And then in property financing. Of that, it could be to buy a house, it could be to buy land, it could be to buy commercial buildings, and most of it is going into the latter.
“So the purchase of commercial buildings is probably the biggest one for us. Business lending growth is strong, and so I think that tells you an underlying positive story about the economy.
“People are willing to borrow and deploy that into the economy, adding some capacity, and that will, over time, improve the supply side of our economy too.”
Read more about NAB’s first-quarter financial year 2026 trading results here.
NAB retains top market share
According to the Australian Prudential Regulation Authority (APRA), NAB continues to retain the largest single share of the business banking market, at 21.8 per cent.
However, NAB’s competitors are seeking to push further into the business banking market.
At its half-year results, Commonwealth Bank of Australia reported a business lending book of $168 billion, up 12 per cent from $150 billion in December 2024 and nearly double the $90 billion recorded in December 2019.
CBA’s market share has lifted to 19.1 per cent, up 41 basis points over the year.
SME-heavy states driving lending growth
Auld noted lending growth has been uneven across states, with those more leveraged to SMEs showing stronger activity.
“It’s interesting to see that relative to the share of GDP, lending is strongest in New South Wales and Victoria, less so in WA but that, I think, is just a function of having an economy that’s not really leveraged to small and medium-sized businesses,” Auld said.
“Most of the activity gets done by big mining companies who don’t typically come to us for a loan.”
Auld also gave data on NAB’s Business Conditions Survey. Here, NAB found that business conditions have picked up since the end of 2025, having dropped substantially since 2023.
Industries such as mining, recreation, transport, utilities, and construction are all currently posting stronger business conditions than their long-term averages.
Commercial real estate remains sector-specific
Auld acknowledged that commercial real estate remains sensitive to the higher-rate environment, although she suggested downside risks may be contained if monetary policy tightening remains modest.
“People were pretty buoyed up about all things property last year as rates were coming down. And I suspect some of that enthusiasm might have waned a touch,” she said.
Auld noted that the outlook for commercial property depended on the sector.
“Industrial property is still very popular. Commercial is, as a whole, but commercial means lots of things. Probably the sector that people still have some lingering doubts about and some worries around vacancy rates over the next couple of years is offices, so industrial is probably everyone’s favourite part of the property complex,” Auld said.
“CBD hotels are another one that’s doing pretty well. But if we’re right that this is not going to be a sort of full-blown, aggressive tightening cycle, and it should just be a reasonably modest recalibration of policy, then I think that’ll definitely limit the damage or the downside to property as an asset class.”
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