Bank business lending down again in June

The trend in weak Canadian commercial bank lending continues (see prior post “Bank business lending down for 5th consecutive month” June 30-09). I’m a week late with June’s figures, but the excitement around Nortel / Ericsson / RIM is to blame.

The category is “Business loans to Canadian residents for business purposes”, and the data is from the Bank of Canada:

December: $191.967 billion
January: $186.086 billion
February: $184.168 billion
March: $184.5 billion
April: $182.228 billion
May: $180.619 billion
June: $178.301 billion

June 2009’s figure suggests that Canadian commercial and corporate lending by chartered banks to Canadian-based businesses is down 7.1% in the space of six months. The folks who manage the balance sheets have freed-up whatever risk-weighted capital was required to underpin $13.6 billion of business loans. Probably earns them a bonus for the year.

Interestingly, the banks have also reduced their overall residential mortgage portfolio from $472.5 billion to $444.9 billion over the past twelve months. The federal government has boosted its “NHA mortgage backed securities” number from $181.9 billion to $274.6 billion.

That’s provided some serious liquidity for the banking system; but I’m not sure any of us can tell you where that liquidity has gone. What we do know is the last twelve months have certainly been good for the shareholders (“Canadian banks a haven in tough times” July 21-09). And isn’t that really the key task for bank execs?

Although that won’t come as much of a salve for some of our elected representatives in Ottawa.

MRM