Leadership shake-up comes as rivals expand their market share
National Australia Bank (NAB) is bracing for heightened competition in its core business lending sector as rivals push deeper into the market.
The bank has been losing ground in business lending, a historically strong area, and expects competition to increase, according to its chief executive.
Speaking at the Australian Financial Review Banking Summit in Sydney on Tuesday, NAB CEO Andrew Irvine (pictured above) highlighted the growth potential in business banking. “The business client is less leveraged than the Australian consumer, therefore there is more growth to be had in it,” he said.
In a leadership shake-up, NAB announced that Andrew Auerbach will take over as head of business and private banking, replacing Rachel Slade. His appointment comes as the bank seeks to strengthen its business lending division. The bank recently announced that chief financial officer Nathan Goonan will leave to join Westpac, a move that surprised industry observers.
The bank’s ability to navigate these changes could be tested, according to Bloomberg Intelligence senior industry analyst Matt Ingram. In a report, Ingram noted that NAB’s leadership transitions may challenge its ability to manage mounting pressures.
NAB is facing increasing competition from Commonwealth Bank of Australia (CBA) and Westpac, both of which are expanding their small business lending operations. As mortgage lending profitability remains under pressure, major banks are targeting the business lending segment, traditionally NAB’s stronghold.
While NAB’s business loan book expanded by 7% in December, CBA outpaced it with an 11% increase, surpassing the overall market growth of 9%.
Shares in the Melbourne-based lender have dropped nearly 20% over the past month following a weaker first-quarter earnings report, where declining lending margins and credit impairments weighed on profit.
Ingram noted that NAB’s margin squeeze points to a slowdown in business lending. “The bank is hitting the brakes on business lending,” he said.
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