Business credit demand growth slows

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Credit bureau Veda reveals business credit demand posted a modest year-on-year rise of 1.8% in the September quarter.

The annual rise in the company’s quarterly Business Credit Demand Index, which measures applications in business loans, trade credit and asset finance, was driven by growth in business loan applications, which improved at an annual rate of 3.1%.

Veda says the rise in business loan applications was led by a 14.8% annual increase in mortgage applications.

“The jump in mortgage application numbers this quarter suggests a return to confidence around investment in property, by both local and foreign investors,” says Neil Shilbury, Veda general manager of commercial risk.

Growth in asset finance applications eased from 6.7% in the September 2015 quarter to 2.3% in the September 2016 quarter, while trade credit applications remained flat following a sustained period of weakness.

Despite the trend towards a large lift in business credit demand shortly after a newly elected government, that has not been the case in this election year, says Shilbury.

“The September quarter seemed to be following this trend at first, starting strongly in the immediate wake of the federal election. However, the boost was short-lived and demand eased throughout August and September,” Shilbury notes.

An overview of the state-by-state findings is as follows:

  • Overall business credit applications: demand was strongest in ACT (+12.2%), followed by Tasmania (+4.0%), Victoria (+3.6%), and NSW (+2.7%), while largely flat in QLD (+0.3%). However, three states showed a decline in business credit applications: NT (-7.8%), WA (-2.1%) and SA (-1.0%).
  • Business loan applications: ACT posted the strongest growth (+15.1%), followed by Tasmania (+5.5%), Victoria (+5.0%), NSW (+4.8%) and Queensland (+0.6%). Three states recorded falls: NT (-11.8%), SA (-3.2%) and WA (-0.3%).
  • Trade credit applications: growth was recorded in the ACT (+10.4%), Tasmania (+3.4%), NSW (+1.4%), and Victoria (+0.9%). NT (-6.0%), WA (-4.7%), SA (-2.4%) and Queensland (-0.5%) showed falls in trade credit applications.
  • Asset finance applications: growth in asset finance applications was strongest in the ACT (+9.3%), followed by Victoria (+4.6%), SA (+4.6%), Tasmania (+2.2%), NSW (+1.4%) and Queensland (+1.1%). Applications fell in both the NT (-4.1%) and WA (-0.3%).

“Queensland’s strong performance across the board, compared to the other mining jurisdictions, indicates the state is emerging from the post-mining boom downturn. In particular, we have seen a notable return to investment in asset finance in Queensland,” adds Shilbury.


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