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The CEO of the big four bank has insisted that its small business lending will not be deterred by scrutiny from the financial services royal commission as its SME loan portfolio grows by 4.7 per cent.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recently announced that SMEs would be the focus of its next round of hearings.
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Following the release of NAB’s 2018 half-year financial results (HY18), the banks’ CEO, Andrew Thorburn, was asked whether such scrutiny would affect the bank’s SME lending operations.
In response, Mr Thorburn said: “I don’t think we are going to back off because of scrutiny or noise. If we believe what we’re doing — and we do — then we will continue to lend to our clients based on their strength, their cash flow and the principles that we’ve held dear for decades.”
Royal commission to cost NAB $40 million
In his HY18 results presentation, Mr Thorburn also disclosed the cost incurred by the Hayne royal commission.
The CEO revealed that in HY18, the commission cost NAB $10 million. The inquiry is expected to cost the bank a further $30 million in the second half of the year.
Reflecting on the current banking environment, Mr Thorburn said: “[I] think this presents a real burning platform for us, and an opportunity for generational change.
“I think we can really face into some things here, and make our bank and our profession really strong and respected again. And that will happen when we own issues, and we fix them, and we develop our culture, and we act.”
NAB boasts $4.6 billion in SME lending growth
NAB’s HY18 results revealed that business and private banking portfolio has increased to $102.4 billion, up by $4.6 billion (4.7 per cent), from $97.8 billion in the previous corresponding period (pcp).
SME loans submitted via NAB’s QuickBiz platform, which offers unsecured loans of up to $100,000 to small business customers, now makes up 32 per cent of NAB’s business lending portfolio, up from 19 per cent in the pcp.
NAB also claimed that approximately 80 per cent of its small business loans were approved within 24 hours.
The major bank’s total business lending portfolio grew by $6.5 billion, from 180.9 billion in HY17, to $187.4 billion in HY18.
Commenting on the results, Mr Thorburn noted the importance of SME lending and claimed that NAB’s small business platform was the largest of the big four.
The CEO said: “[This] is clearly an important market for Australia. Small businesses, medium businesses are the biggest employers in Australia.
“[When] you look at some of the fundamentals of Australia, there are growth opportunities for those businesses, and we’re the largest bank — we are very disciplined.
“I think we have a high degree of competence in our people. And if you look at the growth in SME lending today, we’re growing at about 5 per cent, the market’s growing at about 2. So, we’re continuing to lend, and we will continue to lend.”
NAB’s HY18 results also revealed that the bank’s total loan portfolio grew by $2.7 billion, from $295.1 billion in 2HY17, to $297.8 billion in HY18. However, its total net profit fell from $2.74 billion to $2.58 billion over the same period.
[Related: Brokers originate $102.8bn for major bank]
