This week, Australia’s largest business lender, National Australia Bank (NAB), announced a material increase in impairment provisions, signalling emerging stress from elevated fuel and input costs across Australian businesses. The bank flagged $706 million in credit impairments for the half, up from $485 million previously, alongside an additional $300 million in forward-looking overlays to guard against potential deterioration.
Broadly speaking, this move appears to be part of a wider trend across the major Australian banks. The week prior, Westpac also increased its provisioning levels, reflecting similar concerns around weakening credit quality and rising cost pressures across business borrowers.
Taken together, these updates suggest a coordinated reassessment of credit risk across the Big Four, with markets now increasingly focused on whether further provisioning increases will follow at the remaining major banks. This shift is being driven in part by the delayed yet tangible impact of elevated energy prices and input costs, which are flowing through to business cash flows.
For private credit markets, this emerging trend does provide an opportunity for prudent lenders. As the major banks recalibrate risk appetite, non-bank lenders are likely to play an increasingly important role in providing business funding, a dynamic the Aura Private Credit team is closely monitoring.
That said, the opportunity must be met with discipline. In the current climate, we maintain a deliberate focus on lending secured against real assets and receivables, where tangible collateral underpins downside protection. Our day-to-day focus remains on finding non-bank lenders with strong credit underwriting capabilities, while keeping a close eye on the performance of our existing portfolio of lenders.
With equity markets remaining volatile, protecting investor capital is, and will continue to be, our priority. We're managing the portfolio with that firmly in mind, with the primary goal of delivering a stable NAV followed by risk-adjusted income returns for our investors.
As a team, we believe that high-quality private credit exposures are very effective tools/allocations in portfolios during these phases in the cycle.
Source: ASX, NAB ASX Announcement, April 2026.