The new risk lurking in banks’ commercial real estate lending

Commercial real estate has long been considered the biggest risk lurking on bank balance sheets and Citi has highlighted a new pressure point in major lenders’ sprawling CRE portfolios – the growing costs of the energy transition.

Australian banks have $450 billion of loans to the commercial property sector, including high-rise office towers in the cities and retail shops on the high street. This represents 40 per cent of all their lending to non-financial companies.