Bank loans stagnant for 6th straight month

According to data released by the Bank of Canada, commercial and corporate lending by Canadian Chartered banks appears to have gone to sleep for the past six months. The category is “Business loans to Canadian residents for business purposes”:

December 2008: $191.563 billion
January 2009: $185.679 billion
February: $183.759 billion
March: $184.089 billion
April: $181.811 billion
May: $180.191 billion
June: $177.865 billion
July: $176.164 billion
August: $175.318 billion
September: $172.652 billion
October: $172.592 billion
November: $169.928 billion
December: $170.930 billion
January 2010: $169.423 billion
February: $169.604 billion
March: $170.959 billion
April: $170.663 billion

Commercial and corporate lending by chartered banks to Canadian-based businesses is down $20.9 billion since December 2008, but that’s old news if you are a regular blog visitor. What is currently compelling is the fact that even as the economy began to recover last Fall, the banks have kept their net corporate loan exposure almost perfectly flat. That can’t have been a coincidence, can it?

From what I can tell, everyone in bank land is hustling for new business. A generous take on the stagnant numbers would suggest that the loan portfolio management teams are selling down the new loans — outside the Canadian market — just as fast as they’re booked. Obviously, most clients require their lead bank to retain a material exposure to a new corporate or commercial loan, so perhaps there’s not as much actual lending going on as the flurry of activity would suggest.

Another take — and a sensible guess — would be that the weak credits continue to be pruned as the attractive growing clients are added.

MRM