The ABS this morning released Lending Finance data for the month of November, which registered small seasonally-adjusted rises in personal, lease and housing finance commitments, but a big fall in commercial finance:
In seasonally-adjusted terms, the value of personal finance commitments rose by 1.o% and was up by 6.4% over the year:
The value of lease finance commitments also rose, up 1.5% over the month and by 13.9% over the past year:
The value of housing finance commitments rose by 0.6% in November and is up 3.0% over the year:
Bucking the trend was commercial finance, which fell by -7.2% in November and is down -8.7% over the year, well below pre-GFC highs:
First observation:
So how is the huge mining and processing investment being financed if commercial lending has been flat since 2008?
Is it all in direct debt issues not intermediated by Australian banks?
Is it in loans from overseas banks not on any Australian bank balance sheet?
Second observation:
Leasing normally makes more sense if the user of the equipment can’t use the depreciation allowances against tax in the current and second year. I’m not sure about the reasoning behind novated car leases to employees. Does the growth of lease finance indicate that many companies are making losses and so swithchng from commercial finance, or is it a function of new car sales on a novated lease basis?
Third observation:
If inflation is say 2.5% and population growth say 1.3% is personal credit growth in excess of 3.8% really a good thing?
To address your first observation, its the bond market. Do BHP, Shell etc. borrow from banks? Not really.
Grai has answered your first question.
Regarding lease financing, that’s just a term that encompasses leasing, HP, and chattel mortgages – all common ways of financing motor vehicles, trucks, bulldozers, and a host of different plant and machinery.
SME’s are not borrowing much at the moment, apart from some who are still restructuring. A lot of business is being written as invoice financing, but I’m not sure whether that lending is captured in the stats.
[...] ¹Sources: Australian Bureau of Statistics, 16 January 2013, viewed 23 January 2013 http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument. Macro Business, 16 January 2013, Lending finance shows business credit downturn, viewed 23 January 2013, http://www.macrobusiness.com.au/2013/01/lending-finance-shows-business-credit-downtrend/. [...]