Total borrowing by business is at its lowest level in more than two years, though the rate of decline in the supply of credit by banks is tapering off.
Data on Credit Market Outstanding from the ABS Australian National Accounts: Finance and Wealth shows demand for credit was A$63.3 billion over the December 2020 quarter. Of this:
- the public sector borrowed $28.9 billion;
- households borrowed $22.6 billion; and
- private non-financial corporations borrowed a mere $2.6 billion.
Credit market outstanding grew $185 billion over the quarter, two thirds of which was “revaluation gains”.
Demand for credit, at $64 billion, followed “last quarter’s record of $155 billion,” the ABS said.
The V-shape of the notional recovery story for the Australian economy is upside down, as far as business credit liabilities are concerned.
Loans and placements borrowed by business from all sources declined over each of the last three quarters of CY2020.
From a peak demand for credit of $971 billion at the end of the March 2020 quarter – when the Covid pandemic was still new - demand for credit from business has fallen around 8 per cent to $898 billion, similar to the level of demand in early 2019.
The ABS puts business borrowing from banks and ADIs at $531 billion at the end of December, down 6 per cent from March 2020.
Private non-financial corporations increased their liabilities by $12.9 billion over the December quarter, driven by $32 billion in equity raising, and partly offset by a $13 billion net maturity of debt securities, and $111 billion in repayment of loans.