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Major banking group Westpac Banking Corporation has increased its mark in business lending, as it leans harder into commercial lending.
Releasing its full-year financial results for the 12 months ending 30 September 2026 on Monday (2 November), the major lender revealed its Australian business lending book expanded by 12 per cent over the year, taking total business loans to $128 billion (up from $114 billion in FY2024–25). Institutional lending also surged 18 per cent.
The robust growth came as Westpac strategically shifted focus towards commercial credit to support margins. (By comparison, Westpac’s Australian mortgage book, excluding RAMS, rose 7 per cent to $532 billion, with broker flows dropping to 57.6 per cent from 65 per cent a year earlier).
Westpac’s business and wealth division emerged as the bank’s primary earnings engine, contributing $3.76 billion, or 34 per cent, of total pre-provision group profit, more than any other division.
Net profit for the division climbed 12 per cent to $1.2 billion, supported by an 8 per cent lift in business lending revenue.
Direct channels gain ground over broker flow
The big four bank continued to see returns on its push into direct lending.
Westpac recorded a 2 percentage point increase in new proprietary business lending flows during FY25–26, lifting direct banker origination to 55 per cent.
Correspondingly, the third-party broker share of new business originations dropped to 45 per cent.
The shift coincides with Westpac’s concerted push to grow direct proprietary lending across its network as a mechanism to protect and improve profit margins.
Chief executive Anthony Miller noted that building out first-party origination across the bank has been an active priority, supported by internal investments in front-line business bankers.
“We’ve deepened customer relationships and supported businesses to invest and grow, with business and institutional lending increasing 12 per cent and 18 per cent, respectively. We also increased first-party mortgage origination and this remains a priority. Revenue growth was strong in business and institutional, and up 2 per cent in consumer,” he said.
“We are investing in our people and technology to support future growth while taking a disciplined approach to costs. This included hiring more bankers to support businesses, opening three new regional service centres and introducing our Community Banking Service to 14 locations, helping us to reach more than 65,000 people living in these communities.”
According to the financial results, Westpac’s business lending per banker climbed 11 per cent over FY25–26, backed by a workforce of approximately 1,700 relationship and commercial bankers.
Deepening existing client relationships was central to this strategy, with 74 per cent of new business lending flowing to existing customers.
Westpac also highlighted the rollout of its AI-assisted digital business lending platform, BizEdge. First launched in March 2025, BizEdge has been designed for deal exposures up to $20 million and has so far processed $20.3 billion in loan applications and drove a 45 per cent faster average time to decision.
However, across the entire commercial lending book, the average overall time to decision ticked up slightly from 5.8 days at the end of FY24–25 to 6.1 days by the end of the second half of FY25–26.
Around 19 per cent of Australian businesses now cite Westpac as their main financial institution, according to the bank.
The portfolio expansion was spearheaded by targeted growth in three core sectors. Agriculture led the bank’s business lending growth, with a 21 per cent surge in lending balances, followed by health (up 16 per cent) and professional services (up 13 per cent).
Economic outlook and SME pressures
Looking ahead, Westpac forecasts business credit across Australia to remain stronger than residential borrowing, projecting system business credit growth of 7.0 per cent in FY26–27 and 6.3 per cent in FY27–28 (compared to housing credit forecasts of 3.8 per cent and 5.3 per cent, respectively).
Despite the strong pipeline, the major warned of softening operating conditions among commercial and small-to-medium enterprise (SME) borrowers, noting that SME cash flows are particularly deteriorating amid elevated interest rates and sticky cost pressures.
Westpac affirmed it will maintain lending momentum in business and wealth into FY26–27 by leveraging its transaction banking capabilities, broadening specialist banker presence and deepening existing customer relationships.
Miller said: “In a time of global uncertainty, the Australian economy is holding up relatively well with strong business investment supporting the medium-term outlook. This is evident across our business and institutional customer base where demand for credit remains strong.
“However, inflation remains above the Reserve Bank’s target range and interest rates are likely to remain elevated into 2027. This is presenting challenges for many households and businesses, although impacts are uneven across the economy. As households adjust to ongoing cost-of-living pressures, we remain ready to help those who need it.
“We have made good progress this year and I am confident in the opportunities ahead as we simplify and transform the bank.”
[Related: Brokers flock to Westpac for asset finance deals]
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