Equifax Quarterly Commercial Insights: September 2022
- Overall business credit applications grew by +3.1% (vs September quarter 2021)
- Business loan applications increased by +2.6% (vs September quarter 2021)
- Trade credit applications grew by +2.0% (vs September quarter 2021)
- Asset finance applications increased by +5.2% (vs September quarter 2021)
SYDNEY – 7 November 2022 – Business credit demand has increased year-on-year in the September quarter, returning to growth following a dip in Q2.
The data has been released today by Equifax, the leading provider of credit information and analysis in Australia and New Zealand, in line with the Equifax Quarterly Commercial Insights - September 2022 (formerly Business Credit Demand Index). The Index measures the volume of credit applications for trade credit, business loans and asset finance.
According to Equifax, demand was up across all credit types despite ongoing economic turbulence. This overall growth was led by an increase in asset finance applications.
Scott Mason, General Manager Commercial and Property Services, Equifax, said: “Businesses are operating against a considerably different backdrop this year, when compared to the same quarter in 2021. Last year, several states including NSW and Victoria were in the midst of the Delta variant lockdowns. As a result, much of the growth in business credit demand is being led by these states.
“We’re also seeing industry-specific trends that reflect the changing business conditions year-on-year. For example, demand for trade credit in the accommodation and food services industry increased 14% this quarter. This suggests these businesses, which were some of the hardest hit during Covid, are taking on credit to rebuild or shore up their operations ahead of the upcoming Christmas period.”
Business loan applications were up in the September quarter, growing +2.6% compared to the same period in 2021 and +25.2% vs the same quarter 2020.
Asset finance applications saw strong growth in Q3 2022, increasing +5.2% vs the September quarter 2021 and +14.1% compared to the same period in 2020. Trade credit demand also grew in Q3, increasing +2.0% compared to the previous year and up +2.8% vs September quarter 2020.
“Consumer demand continues to outstrip supply when it comes to construction, which is why we are seeing healthy asset finance growth for this sector - up 8% year-on-year. However, these demand figures don’t mean that construction operators are out of the woods, as insolvency rates in the sector continue to rise,” Mr Mason said.
Insolvencies surged in Q3 2022, up +59.0% in September 2022 vs the same month in 2021. Although rising economic pressures contributed to the uptick, this increase continues the upward trend in insolvencies that has been observed throughout 2022, as volumes get closer to pre-Covid levels.
Construction insolvencies remain high, up +139.0% in Q3 2022 vs the same period 2023. Insolvency levels in the food services and accommodation and retail trade industries also continued to climb.
Business credit demand September 2022 vs September 2021:
Business credit applications increased 3.1% in Q3, with the strongest growth seen in NSW (+9%) and the ACT (+8%)*. Applications also increased in VIC (+3%) and the NT (+1%)*. Demand declined in WA (-6%), SA (-1%), TAS (-1%), and QLD (-1%).
Business loan demand rebounded across all states compared to the same quarter last year, up +2.6% overall. The ACT (+6%)* and NT (+6%) saw the greatest growth, followed by NSW (+5%), TAS (+3%), SA (+2%), VIC (+2%), QLD (+1%) and WA (+1%).
Trade credit applications were higher in Q3 2022 (+2.0%), driven by positive demand in the ACT (+19.0%)*, NSW (+11%) and SA (+4%). WA experienced the largest decline in trade credit demand (-9%), followed by QLD (-3%), and TAS (-2%), while demand was flat in VIC (-0%), and the NT (-0%)*.
Asset finance applications grew +5.2% year-on-year, thanks in large part to increasing demand in NSW (+19%) and VIC (+10%). The ACT (+6%)* also experienced growth in asset finance demand this quarter. All other states saw a decrease in demand, led by WA (-16%) and SA (-11%), and followed by TAS (-8%), the NT (-8%)* and QLD (-4%).
*Low volumes
IMAGE 1: Equifax Commercial Credit Demand Index – September 2022 Quarter
IMAGE 2: Equifax Commercial Credit Demand Index by categories of credit – September 2022 Quarter
IMAGE 3: Business Loan Applications State Overview, 2022 Q3
IMAGE 4: Asset Finance Applications State Overview, 2022 Q3
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NOTE TO EDITORS
The Equifax Quarterly Commercial Insights (formerly Business Credit Demand Index) measures the volume of credit applications that go through the Equifax Commercial Bureau by financial services credit providers in Australia. Based on this, it is considered to be a good measure of intentions to acquire credit by businesses. This differs from other market measures published by the RBA/ABS, which measure new and cumulative dollar amounts that are actually approved by financial institutions.
DISCLAIMER
Purpose of Equifax media releases:
The information in this release does not constitute legal, accounting or other professional financial advice. The information may change, and Equifax does not guarantee its currency or accuracy. To the extent permitted by law, Equifax specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.
