Business credit the 'new battleground' for lenders

by Adam Smith24 Feb 2012

Business credit has seen a strong rebound following what one analyst has called "a long period of uncertainty".

Veda has released data indicating that demand for business credit in the final quarter of 2011 was up 7.3% year-on-year. The company's head of commercial risk, Moses Samaha, said the rise was driven by better business conditions and improved credit management practices.

Samaha said the rise followed "a long period of uncertainty". He predicted that business credit could become "the new battleground" for lenders given weak demand for consumer credit.

Business loans and trade credit both saw significant gains in the final quarter of the year, up 10.5% and 7%, respectively. Asset finance saw a more moderate gain of 4.2%, but Samaga said the result was to be expected.

"It has been two years now since the introduction of the government stimulus packages, so I believe the growth we are seeing in asset finance is reasonable as businesses get back in the market for assets, and particularly automotive financing," he said.

SMEs generated the greatest amount of demand, Veda indicated. While they account for only 6.5% of all businesses, SMEs represented 42% of commercial credit enquiries.

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