July 13 (Bloomberg) -- National Australia Bank Ltd. is sitting at the top of the Australian loan arranger rankings for the first time since 2001, with the market poised to expand as companies refinance debt and borrow to fund expansion.
National Australia held an 18.6 percent share in the first half as it helped arrange loans for Myer Holdings Ltd., Lend Lease Group and Tabcorp Holdings Ltd., according to data compiled by Bloomberg. That’s the first time the Melbourne-based bank has been No. 1 in any half-year period since 2001. It displaced Australia & New Zealand Banking Group Ltd.
Loans have exceeded non-financial corporate bond sales by 10 to one this year, even as Woolworths Ltd. and Fonterra Cooperative Group Ltd. were able to issue notes at lower rates than the nation’s banks, Bloomberg data show. Australian companies, which have as much as A$80 billion ($85 billion) of debt to refinance in 2011, are planning A$139.5 billion of new investment in the year ending June 2012 as a mining boom drives the value of planned resources projects to a record.
“National Australia has been gaining market share across multiple business lines,” said James Ellis, a Sydney-based bank analyst at Credit Suisse Group AG. “It wants its return on equity to improve and syndicated loan arranging is one way in which wholesale and business banking can contribute.”
Return on Equity
Australian companies borrowed $23.7 billion in loans last quarter, up 51 percent from $15.7 billion in the prior three- month period, Bloomberg data show. The biggest loan was A$2.5 billion of seven-year project finance debt provided by 15 banks to fund the construction of a hospital in Adelaide.
National Australia, the smallest of the four major lenders by market value, is the biggest lender to businesses, according to data from the banking regulator.
Its return on common equity was 12.2 percent in the half- year to March 31, compared with Westpac Banking Corp.’s 19.4 percent and ANZ Bank’s 15.9 percent, according to Bloomberg data. Commonwealth Bank of Australia’s ROE was 17.1 percent in the six months to Dec. 31, the data show.
National Australia’s lending to non-financial companies reached A$100 billion in May, more than Westpac’s A$64.9 billion, Australian Prudential Regulation Authority figures show. The bank joins 51 other lenders that have helped arrange financing in the nation this year, according to Bloomberg data.
“There is no doubt the market remains competitive,” Christine Yates, Sydney-based head of Australian debt markets origination at National Australia, said. “We are seeing established banks, both Australian and foreign, seeking to build their balance sheet by offering large loan commitments to Australian borrowers.”
Yates attributed National Australia’s climb in the loan rankings to its “strong” relationships with customers, and said the bank expects to see more companies seeking loans to refinance debt after reporting financial results in August and September.
Australian business investment rose in the three months through March more than economists forecast, the third straight quarterly increase, as growth of mining projects accelerated, government data show. The value of minerals and energy projects under development in the nation was A$173.5 billion as of April 30, up 31 percent from A$132.9 billion on Oct. 31, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.
The resources boom has pushed the Australian dollar, the world’s fifth-most traded currency, up 20 percent against the U.S. dollar in the past 12 months.
The so-called Aussie traded at $1.0644 as of 4 p.m. in Sydney and will buy $1.04 at the end of 2011, according to the median forecast of 37 strategists surveyed by Bloomberg. It reached $1.1012 on May 2, the highest level since exchange-rate controls were scrapped in 1983.
The Reserve Bank of Australia has kept borrowing costs unchanged at 4.75 percent for the past seven meetings as the rising currency helps limit gains in inflation.
Australian government bond and inflation-indexed note yields show investors expect consumer prices will rise an annual 2.82 percent for the next 10 years.
Australia’s 10-year government bond yield rose 2 basis points to 4.96 percent today, or 206 basis points more than similar-maturity Treasuries.
Australian home-loan approvals rose for a second straight month in May as construction of new dwellings and demand from investors increased, according to statistics bureau data released July 11. The total value of loans increased 2.9 percent to A$20.5 billion, the report showed.
National Australia Chief Executive Officer Cameron Clyne increased mortgage lending by 15.8 percent in May from a year earlier, more than double the overall 7.2 percent rate, according to a Credit Suisse analysis of data released on June 30 by Australia’s bank regulator.
The lender started a national advertising campaign on Feb. 14 -- Valentine’s Day -- depicting the bank ending its relationship with rivals and offering Commonwealth Bank and Westpac clients A$700 to switch banks.
The campaign uses social media including Facebook and Twitter, print advertisements and so-called ambush marketing, such as tying to a street lamp an actor dressed as a banker pleading with morning commuters to help him down after being “ambushed” and hogtied by rival bankers furious at National Australia for turning its back on the “club.”
“We picked a fight, we hoped other people would turn up, and they did,” Clyne told investors in May. “We will continue to punch.”
Clyne is winning business from rivals in “a lot of areas,” said Credit Suisse’s Ellis. “A good performance in syndicated loan arranging is consistent with that.”
--With assistance from Jacob Greber in Sydney. Editors: Shelley Smith, Malcolm Scott.
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