BoC data: Canadian commercial credit crunch continuing
The credit crunch is still in full force.
According to data just released by the Bank of Canada, commercial lending continues to drop across the country. The category is “Business loans to Canadian residents for business purposes”:
December: $191.563 billion
January: $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
Commercial and corporate lending by chartered banks to Canadian-based businesses is down $21.635 billion year-to-date, or about 11% of what was outstanding as of December 2008.
Although the flat September/October outstanding loan data suggested the worst was over, it turned out to be a head fake as outstanding loans dropped by $2.66 billion in November. The largest monthly drop so far this year (on a percentage basis), and equal to any 2009 monthly drop in absolute terms.
The bank credit crunch isn’t over yet.
MRM
Is it really a credit crunch, or rather companies shelving capex projects due to the slow economy?
i.e. a supply or demand problem?
Even though some players have left the market, I think Canadian banks are still willing to lend to healthy companies.
Even so, lending is biased to the top names, and at lower LTVs. If secured lending advance rates were to drop from, say 80% to 70%, that could fully account for the decline even without shrinkage in the number of borrowers.
Is that data normalized? because the data above does look like a slow declining trend if you chart it as is:
https://spreadsheets.google.com/oimg?key=0Aq2-vD_9vsXXdDIzakZJRkMwZmlOT3RJeURfWGRIbFE&oid=2&v=1262975678602
But if you normalize by number of actual days in the month (and non bank holidays) you get this:
https://spreadsheets.google.com/oimg?key=0Aq2-vD_9vsXXdDIzakZJRkMwZmlOT3RJeURfWGRIbFE&oid=1&v=1262975723639
which shows a nice uptick from September through November.
The banks are hording cash and starving out the non-bank competition while jacking up their yeilds accross the board. The banks are not interested in "helping out" even their best clients. This is a time to extract their "pound of flesh" from the ones still standing! Try as they may Small Medium Enterprise is frozen out of the credit game.
Damnit, so much for the miracle of googledocs. Those image links mysteriously stopped working. Try this: http://spreadsheets.google.com/pub?key=t23jFIFC0fiNOtIyD_XdHlQ&single=true&gid=0&output=html