Data shows business lending on the rise, but expert unconvinced

Business lending is on the up according to figures from the banking regulator, but one expert is unconvinced the March data is reflective of a wider trend.

The Australian Prudential Regulation Authority monthly lending figures for March, released on Friday, also shows muted growth in bank credit cards portfolios.

But John Hinchy, Chief Statistician of market research firm DBM, says his preferred measure of lending – Reserve Bank figures – are yet to show an increase in the sector, and the APRA figures are not evidence of an upward trend.

“While the differences between the APRA and RBA series are detailed and technical, the RBA series might offer a clearer picture of total business borrowing,” Hinchy told SmartCompany.

” … the RBA series is designed to represent the general economic position of business borrowing, while the APRA series provides a more technical account from the viewpoint of banks of their lending.”

RBA figures for March show total credit provided to the private sector lifted 0.6%, while business credit rose 1%, from 0.8% the previous month. But over the year to March, business credit declined by 0.6%.

According to Hinchy, the commentary from the central bank on business lending also suggests there’s still some way to go before ringing the bell.

He adds that in the middle of last year, there was a sudden jump in business lending figures, primarily related to APRA allowing a National Austalia Bank product to be included in its business lending measurements, which previously hadn’t been included.

Deutsche Bank and Nomura say business credit is growing, although Nomura’s Victor German has warned that banks face competition in the debt market from the bond market, The Australian Financial Review reports.

The Australian Bankers Association declined to comment on the ABA figures.