Aussie banks face slowing loan growth and consolidations

Rising competition is increasing banks' appetite for business lending, said Fitch.

Australian banks’ are well-placed to weather operating environment headwinds—although loan growth may slow.

Banks face rising competition, which will result in greater appetite for business lending, said Fitch Ratings.

As of Q4 2025, investor loans made up 38% of all new mortgages in major banks, the credit rating agency said in a July report.

Separately, a key trend happening in the banking sector is the ongoing consolidation of financial institutions.

The number of authorized deposit-taking institutions have fallen by 114 since 2004.

Mutual lenders in the country have embarked in mergers over the past three years. This comes as lenders seek to form entities that have A$20b in total assets, S&P Global Ratings said in a separate report.

In 2024, S&P estimated that up to 40 lenders may consolidate and disappear.

Some mergers did not proceed as planned, such as that of Credit Union Australia (Great Southern Bank) and Police & Nurses Limited, which was called off in early 2026.