Monday, May 2, 2011

CBA: Business Credit Not Yet Seen To Go Up

This year is not the time for business credit to surge. This has been seen especially with the country’s biggest lender stating that the “engine drivers” of economic growth are not borrowing cash but are holding on to it.

The major banks’ prediction of a sizeable rebound in lending to small and medium sized enterprises, and the pickup of the number of loans given to companies in the 2 million or less category in September 2010 gave the industry hope of a sustained recovery especially with the increased demand from small businesses. However, these hopes have been stalled by a subdued retail sector and the natural disasters in Queensland, New South Wales, and Victoria.

Business lending in February, according to APRA, increased by 0.6 per cent which worked out at an annual growth rate of 7.2 per cent. This was considered by Deutsche Bank analyst, James Freeman, as a significant rebound.

National Australia Bank leads the charge followed by ANZ and CommBank. Behind them is Westpac. In the regional sector, Bendigo takes the lead. BoQ declared that its lending to the SME sector for the six months up to the 28th of February increased slightly from $100 million to $5.3 billion.

While Deutsche Bank suggests on not dwelling too much on February lending figures, CommBank also said that there had been a slow start to business lending in the first three months of the year 2011.

The bank said that “while there has been some pick-up in activity, we don't expect a boom. This is largely due to the number of businesses sitting on more cash. Instead, we expect growth levels to be steady over the remainder of the year.”

News Source: Sydney Morning Herald »
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