October delivers stunning $4.7 billion loan jump

According to data released by the Bank of Canada, commercial and corporate lending by Canadian Chartered banks skyrocketed by more than $4.7 billion in October. That’s the largest one month jump since we began tracking the data almost two years ago. 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
May: $167.878 billion
June: $166.869 billion
July: $168.488 billion
August: $166.274 billion
September: $165.062 billion
October: $169.796 billion

Commercial and corporate lending by chartered banks to Canadian-based businesses is still down by about $22 billion since December 2008. But the news is the massive increase in October.

I’m trying to think about which M&A deals closed that month that could have accounted for the huge swing, but nothing sticks out. The BHP/Potash deal involved a few billion of new loans, but that didn’t close. According to PWC, 13 deals were announced in Canada during Q3 worth more than $1 billion each; perhaps the answer’s there.

It seems unlikely that 940 net new $5 million commercial loans were advanced that month. Someone out there must know what drove the loan dollar volume. As exciting a move that it is, we’re still not back to where outstanding credit balances were in April 2010.

But still. $4.7 billion in a month. Yowza!

MRM