Bank lending to businesses is showing some flickers of life with Reserve Bank figures recording a month-on-month rise in August and the slowest annualised fall since last November.
Reserve Bank data out today shows total lending to business stood at NZ$72.3 billion at the end of August. That’s up NZ$127 million from the NZ$72.18 billion at the end of July, but is down 6.6% from NZ$77.55 billion in August last year. That’s the smallest annualized fall since a 4.5% drop in November last year. It last rose in July 2009.
Meanwhile, lending to both the agricultural and household sectors rose.
Lending to agriculture rose 1.9% year-on-year to NZ$47.8 billion.
Total household claims were up 2.2%, year-on-year, or just 0.1% month-on-month, to NZ$181.2 billion. The growth, however came from the housing sector, up 2.4% year-on-year, or NZ$230 million month-on-month, to NZ$169.4 billion, with consumer lending down 1.4% year-on-year, or NZ$25 million month-on-month, to NZ$11.79 billion, showing no signs of a credit card led splurge before GST is hiked to 15% from 12.5% on October 1.
The recently released PricewaterhouseCoopers (PwC) third New Zealand Banking Perspectives report noted a “dramatic” 6% decrease in business lending in the six months to March.
PwC partner Sam Shuttleworth said lending to businesses was likely to continue falling because companies themselves weren't necessarily taking on business investment activity therefore reducing borrowing demand, there was an increase in corporate bond offers, and the fact that borrowing money was costing more because the banks themselves are paying more for their funding and looking to recoup this from customers.