By Gareth Vaughan
The property, property development and food manufacturing sectors accounted for the strongest growth in bank lending to businesses during December, when business credit jumped by just over NZ$1 billion.
The NZ$1.006 billion surge in business credit in December was easily the strongest monthly rise during 2010. Business credit only rose four out of 12 months last year with the next biggest increase a NZ$596 million rise from September to October. It was also the strongest month-on-month growth recorded in a December month since December 2006 when businesses took on NZ$1.3 billion of new debt.
Reserve Bank data shows bank lending to the food manufacturing sector rose by NZ$649 million to NZ$4.6 billion in December from NZ$3.9 billion in November. Lending to what the Reserve Bank describes as property & business - with the majority of this category being lending for property and property development, alongside loans to the likes of real estate agents, law, accounting and architecture firms - rose by NZ$730 million to NZ$27.3 billion in December from NZ$26.6 billion in November.
The rise in lending to the property & business and manufacturing sectors was the strongest growth recorded in the 23 business categories, excluding agriculture, measured by the Reserve Bank. Agriculture sector debt fell by NZ$220 million month-on-month to NZ$47.81 billion in December from NZ$48.03 billion in November.
The December business credit growth comes after the Reserve Bank said in last November's Financial Stability Report that it wanted to see "modest growth" in business credit to help sustain an economic recovery.
Then in early December ANZ New Zealand announced that it had NZ$3 billion available for lending to small and medium sized businesses in a move ANZ CEO David Hisco said was to get the message across that the country's biggest bank was "well and truly" open for business.
This came after the ANZ's chief economist, Cameron Bagrie, told interest.co.nz that businesses had deleveraged too much and had developed lazy balance sheets. Bagrie said he was expecting a 5.9% rise in systems-wide business credit, including rural lending, in the year to September 2011. That comes after ANZ estimated business credit fell 3.3% in the year to September 2010.
Meanwhile, the Reserve Bank's monthly sector credit data also shows that mortgage debt fell in December, month-on-month, for the first since Reserve Bank records began.See full story.
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4 Comments
If this is expected to fit snuggly into the spin about recovery in our time...then I am off outside to count the flying pigs. Any entity that took the bank bait is now to be hit with rising costs for credit and another year of BS and spin wrapped round a few Rugby games, while the rest of the world experiences market upheaval thanks to Bernanke deliberately debasing the US$.
Apart from the RWC there are only black swans to be seen in the year ahead. Until the bulk of the earning sector of the population are able to save...ie when housing becomes affordable....there can be no real "recovery". Inflation this year 5% plus but not counted!..meanwhile real incomes rose 1.7% and debasement of the Kiwi was 3% plus last year. I love my lazy balance sheet...it's utterly devoid of debt.
Really? In 4 years, you say....It must be in our eating figures, I guess :)
Property & Business (December figures,Mil.): 2008= $29,038 2009= $27,885 2010= $27,340.
So 2010 is down $1.698 billion on 2008, and down $545 million on 2009. But I guess it is their highest figure since March!
I was cheekily 'having a go' at your headline, Gareth! It doesn't say 'overall...', but posts "Property and food manufacturing drive biggest December rise in business credit for 4 years". I'd suggest the overall result isn't primamily composed of 'property borrowing', from what those snapshot stats. show me.
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