Commonwealth Bank capitalises on small businesses

Small enterprises lending grows to 8.3% as it leads the competition with only 7.86% interest.

The Commonwealth Bank has grown small business lending at almost 10 times the rate of its competitors, but warns that increasing competition could affect margins.

The bank's small business book, which covers loans under A$2 million (US$1.68 million), is now worth A$25 billion (US$21.06 billion) and spread across 130,000 customers.

This segment of the lending market has traditionally been dominated by the ANZ and National Australia Bank, but CBA has ambitious growth targets.

CBA's small business lending grew by 8.3 percent over the past year. This compares with just 0.3 percent for the overall small business market -- primarily the other major banks.

CBA executive general manager of business banking, Ian Narev, said the bank would aim to boost market share by competing on loan pricing.

The bank currently leads the field with an interest rate of 7.86 percent for a small business residential-secured loan, compared with NAB's 8.68 per cent, Westpac's 8.69 percent and ANZ's 9.12 percent.

View the full story in The Australian.