AUSTRALIA'S big four banks have increased their exposure to farming to more than $107 billion, with National Australia Bank still dominating the market.
Despite major farm debt issues facing Australian producers, in particular those in northern Australia, low interest rates, cheaper land and a falling dollar have made some expansion plans worth pursuing.
Land purchases make up the major component of farm debt.
Overall, NAB's total agricultural exposure grew to $38.1 billion in September 2014, up from $37.2 billion in September 2013. Specifically in Australia, its exposure grew to $20.5 billion up from $20.3 billion.
However, in the beef sector where Australia's farmers have been hit hardest, the bank reduced its exposure to $3.48 billion from $3.65 billion.
The bank has seen several major cattle stations placed in receivership and sold off including most recently a station, Corfield Downs, north-west of Longreach which sold for about half of what it was bought for during the boom time.
The bank has roughly 1 per cent of its agricultural loans – or about $380 million – unsecured, however it continues to dominate market share with 22.3 per cent of lending up from 22.1 in September last year.
The bank now has 600 specialist agri bankers across Australia and the agribusiness division is seen by the bank as a more attractive customer segment than the banks' $59.1 billion commercial real estate division. The bank was unavailable for comment.
Westpac's exact figures were not made available but the bank said its exposure had grown to more than $20 billion.
Agricultural lending ahead of system growth
Its agricultural lending in Australia was well ahead of system growth and about twice that of system growth in New Zealand. Westpac's general manager for agribusiness Stephen Hannan said further growth was anticipated.
"We are already seeing promising signs of growth at the farm gate in this new financial year," he said. "With a quality book and our customers in good shape we believe there are further opportunities ahead for them and the industry in the year ahead."
Westpac's stressed exposures have also declined in agriculture to just below $1 billion down from about $1.25 billion this time last year.
ANZ's exposure in agriculture as of September 2014 fell to 3.9 per cent of total exposure at default, down from 4.3 per cent a year earlier.
The bank's banks total exposure at default in the September quarter was 796 billion.Non-performing loans
The bank's percentage of non-performing loans within its agricultural exposure has dropped from 4.1 per cent to 2.5 per cent as of September 2014.
CBA's exposure to agriculture as of June 2014 was $17.9 billion, up from $17.3 billion in the previous corresponding period.
The CBA's most recent results show that of the $17.9 billion in exposures none are rated AAA to AA– and only $500 million sit within the A+ to A- rating while $2.1 billion sit between BBB+ and BBB-.
CBA's Bankwest arm has had several farms in receivership including six holdings once owned by KM Cattle Company.
