National Australia Bank says high energy costs are helping to fuel surging demand for electric vehicles, solar panels and batteries from its business clients, as banks gear up for an expected boom in green finance.
The country’s biggest business bank on Monday said business loans to finance electric vehicles (EVs) and plug-in hybrids had ballooned by 900 per cent since 2020, and it expected further strong growth in EV lending. Loans for solar assets such as solar panels and batteries had jumped 600 per cent since 2020, it said.
NAB’s group executive for business banking Andrew Irvine.Credit:Michael Quelch
While the growth is off a low base, and NAB did not reveal the dollar value of these loan portfolios, group executive for business and private banking Andrew Irvine said the trend showed Australian businesses wanted to invest to lower their carbon emissions and curb high energy costs.
“I think we’re seeing a real step change in the focus of Australians and Australian business into transition,” Irvine said.
“The fact is that the cost of energy and power is pretty meaningfully impacting the business case of making these investments. I think many more of our customers are looking at it and saying, ‘OK, this makes sense, I’m doing it’,” he said.
For example, NAB said one of its clients, Victorian winery Tahbilk, had cut its use of energy from the grid by 39 per cent after installing solar panels.
Banks are jostling to finance growing green energy investment across the economy, and NAB on Monday launched a new green agriculture loan and a green equipment loan for business clients.
While Irvine signalled lending for commercial EVs, equipment or solar panels was unlikely to continue growing at the rapid pace of the last couple of years, he said Australia had room to continue to grow “pretty meaningfully” in the future.
All of Australia’s big four banks are chasing increased exposure to sustainable finance, as they also face pressure to cut their lending to the country’s largest carbon emitters, which mainly occurs through the banks’ institutional businesses. Even so, analysts from Macquarie last week said the big four were less exposed to fossil fuel businesses than major banks in the United States and Canada.
The Macquarie analysts said the big four banks’ sustainable finance commitments had hit $315 billion, and NAB’s targets for cutting emissions from its lending for oil, gas and cement manufacturing were the most ambitious of the big four. Westpac had the most ambitious target in the power generation sector, the analysts said.
Business banking is a key battleground for Australian lenders, and Irvine said NAB was still seeing “pretty good underlying strength” in the economy, including sings of supply chain pressures easing.
“Shipping costs have come down – the costs of a shipping container is down meaningfully. We’re seeing more product into Australia,” he said.
NAB’s rivals are also eyeing the potential boom in loans for EVs – a market that has been relatively slow to take off in Australia, but has been growing quickly lately. Motoring industry statistics on Monday showed the Tesla Model Y was the 10th most popular vehicle sold here in November, and Toyota’s Hi-Lux was the most popular.
The Federal Chamber of Automotive Industries said there were 13,415 zero and low-emissions vehicles sold in November. About 60 per cent of these were hybrid vehicles, a third were battery-powered, and a small share were plug-in hybrids.
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