Australian Banks Fortnightly: Money in the Bank: Issue #27

Research evidence excerpt

Australian Banks Fortnightly: Money in the Bank: Issue #27

Global Research

24 July 2026ab

Australian Banks Fortnightly Equities

AustralasiaMoney in the Bank: Issue #27

Financial

John Storey, CFA

UBS Australian Bank Fortnightly: Money in the Bank Analyst

We know SME lending is margin accretive, but where are the sector risks? This note john.storey@ubs.com

comes after two recent corporate events featuring Alex Twigg, co-founder of Judo Bank, +61-2-9324 3864

who discussed challenger banks and fintechs and Mark Donovan and David McQueen, Nicholas Sobolev, CFA

non-bank capital providers. For summary notes on these discussions, please reach out. Analyst

nicholas.sobolev@ubs.com

+61-2-9324 3026

SME pulse check: Xero and the ABS provide SME data by industry and geography.

While not specific enough for detailed credit analysis, it provides a useful top down Lucy Huang

framework for assessing SME free cash flow (FCF) and interest coverage trends and Analyst

lucy.huang@ubs.com

drivers across industries. Health care and transport businesses have seen the largest net

+61-2-9324 2253

new entrants with Agri and retail having net exits over FY24-25. Administrative and

transport businesses had the lowest survival rate from 2021-22 vintage companies, Ailsa Lei

while agri, health and real estate were most resilient. The proportion of SMEs increasing Analyst

ailsa.lei@ubs.com

their employee base has shrunk ~10% since 2017 relative to SMEs reducing their

+61-2-9324 3181

employee bases. This would indicate more SME businesses have transitioned to stable

(not growing / shrinking) from growing (pre-Middle East conflict).

1. Sales growth. Health and social assistance experienced the strongest sales

growth at ~+13% CAGR since 2018, followed by public admin (+9%) and finance