Westpac beefs up business lending

Westpac wants to topple National Australia Bank as the country's biggest lender to business, as competition heats up for corporate and small to medium enterprise customers.

As part of a move to quicken growth in its lending book after years of strengthening the balance sheet, Westpac is looking to small and medium enterprises (SMEs).

The push is the latest sign that banks are betting on a rebound in business borrowing in 2014 despite the mining boom tapering off.

Westpac's head of retail and business banking, Jason Yetton, said the bank aimed to become the country's "number one" business bank by 2017, with an eye to small business customers in particular.

"We believe we can significantly expand our share of the market after investing in our business banking arm," Mr Yetton said.

"It's a big market, growth is improving, and I think we've got a good capability in this segment."

As part of its attempt to lift its share, Westpac is recruiting more small business bankers, and earlier this year appointed its first senior executive to manage the sector, Julie Rynski.

In a trend seen throughout the industry, Westpac is also spending millions on technology upgrades, including smartphone applications aimed at small business owners.

Small and medium-sized business lending is catching the attention of Australian banks because credit growth is expected to pick up as industries outside of mining increase their investment over the coming year.

Official figures for October show the annual growth in business credit accelerated to an annualised rate of 4.9 per cent, up from 1.9 per cent in the previous month. Westpac forecasts business credit growth of 3 per cent this financial year, up from 1 per cent last year.

"In the last few months business credit growth has improved, and we expect this to continue," Mr Yetton said.

A recent survey has prompted analysts at Macquarie to say credit growth in the "mid to high single" digits is possible.

In a note to clients, Macquarie analyst Mike Wiblin said small and medium enterprise customers surveyed by East & Partners were increasingly keen to borrow, with the share of borrowers planning to take on new debt rising to 13.3 per cent, from 7.8 per cent in January this year.

Mr Wiblin said ANZ was increasingly aggressive in its attempt to lure customers with lower interest rates. "Both NAB and ANZ appear to be competing hard in business, with Westpac taking a more moderate, less price-focused approach," he said.