"Big four raise commercial holdings"

"Australia's big four banks have collectively increased their exposure to commercial property by $1.73 bullion in the past six months, but some analysts hold reservations about the growth of non-core property lending.
The Commonwealth Bank of Australia lead the charge back into the sector, increasing its exposure by $2.1 billion to $52.8 billion in total committed exposure.

"The Commonwealth Bank has and will continue to grow its commercial property exposure on a selective basis to proven sponsors across all segments and geographies," a CBA spokesman said. "The majority of our recent growth has been on the eastern seaboard, with limited, with limited additional supply supporting sound fundamentals."

The bank's guarded remarks on its comparatively large increase in lending come as concerns to grow in the market that a cheap debt-fuelled binge on property has started.
Leading banking analyst CLSA's Brian Johnson said he was comfortable with the banks' half-yearly statements.

"The cost of borrowing from big companies has come down a lot and even though capitalisation rates on core property have come down, the spreads are still healthy," Mr Johnson said."
However, if you look at the non-core, I think there isa  problem there. I don't think there is a healthy gap on the spreads there."

Australia and New Zealand Banking Group has decreased its exposure to commercial property by $100 million to $30.2 billion in the six months ending December. It has fallen $700 million in the 12 months to December.

The bank has reduced its exposure, but it is still clearly in the market for business. It is understood that ANZ provided the lending for joint venture partners Alceon and Trident to purchase BlackRock's Foxtel building on the Gold Coast on a loan-to-value ratio of 65 per cent.

National Australia Bank saw its exposure in property slip by $1.1 bullion in the last six months to $60.1 billion. However the majority of that was off-shore. In Australia, NAB's exposure increased by $100 million to $45.1 billion. Its percentage of impaired loands has also dropped to 2 per cent from 2.75 per cent six months ago.

NAB's general manager for property finance, Andrew Balzan, said a cautious outlook on the sector was imperative.

"NAB remains committed to supporting the domestic commercial property market," he said. "All enquiries are reviewed on a case-by-case basis to ensure the underlying metrics of the transaction correspond with our prevailing view of the market sector."

NAB's quarterly commercial property survey identified that finance and fudning were the enxt biggest chalenges for property owners, after consumer confidence. Its commercial property index, which gauges market conditions, is forecast to rise over the next 12 months.
Westpac Banking Corporation also shower a slight increase during the six months - with the bank's total committed exposure up to $52 billion from $51.37 billion.

This article was sourced from The Australian Financial Review and was written by Matthew Cranston.