Signs of pick-up in business lending

Business loan applications across Australia rose 7.8 per cent in the March quarter,.

Business loan applications across Australia rose 7.8 per cent in the March quarter, according to credit information provider Veda’s quarterly Business Credit Demand Index survey, indicating promising signs of a pick-up in business lending.

Business loan applications rose 14.2 per cent in South Australia, 9.5 per cent each in NSW and Queensland and 6 per cent in Victoria, during the quarter, Veda’s data showed.

Growth was more modest in the mining state of Western Australia at 1.8 per cent.

“Growth in business loan ­applications was the strongest it has been since the December 2013 quarter, and we saw positive asset finance application figures for the first time in seven quarters,” said Veda’s manager for commercial credit, Moses Sam­aha.

“However, business investment is being held back by the soft business credit growth in the mining states.”

Signs of renewed growth in business lending is expected to provide a boost for banks given business credit growth for many years lacking the strength of the housing market.

The Australian economy expanded by just 0.5 per cent in the last three months of 2014, hurt by a fading mining boom and a collapse in global prices of commodities and oil since late last year.

Rising unemployment and falling consumer and business sentiment forced the Reserve Bank to cut interest rates to a record low of 2.25 per cent in January this year.

The central bank is widely expected to cut rates at least one more time this year, as it seeks to bolster economic growth.

Veda’s findings are in line with data from other similar ­surveys.

Earlier yesterday, National Australia Bank’s monthly business survey indicated business confidence and conditions recorded a slight lift in March, with the bank’s business confidence index improving by three points in the month.

The conditions increased substantially in the bellwether wholesale industry.

With conditions pointing to a slightly above average rate of economic activity, business confidence could be boosted further if the upswing was maintained, NAB chief economist Alan Oster said.