Investment & Asset Finance Growth Surging – CBA
(8 June 2021 – Australia) CBA data reveals significant asset finance growth across multiple sectors, highlighted by demand for excavators accelerating 191 percent year-on-year (YOY).
Australian enterprises are continuing to invest for the future with new data from Commonwealth Bank indicating financing for plant, equipment (P&E) and machinery was up strongly by 21 percent in May compared to the same time in May 2020.
The construction industry has recorded significant YOY growth of yellow goods such as excavators (up 191 percent) and other earthmoving equipment (up 121 percent). The agriculture sector has also witnessed YOY growth in the financing of energy efficient equipment (EEE) such as lower emitting tractors (up 88 percent) and loaders (up 73 percent).
East & Partners latest Asset & Equipment Finance research, based on direct interviews with 1,297 enterprises with asset financing in place in January 2021, signalled record high asset finance growth projections for the year ahead despite ongoing COVID restrictions, trade restrictions and supply chain disruption concerns. Fieldwork for the upcoming 2022 round of reporting has been brought forward to September and October with client private question submissions due by September 13.
CBA vehicle asset finance trends for May 2021 that compare YOY to May 2020 include:
- Total car financing increasing 35 percent;
- Automotive repair equipment almost doubling (93 percent) largely due to the vehicle supply issues relating to the pandemic, similar to why there is currently a very buoyant secondary vehicle market; and
- Light commercial vehicles between 2 – 3.5 tonnes increasing 136 per cent, benefiting directly from the government’s manufacturing and construction stimulus.
CBA asset financing rates begin at 2.89 percent for a three-year term under the SME Guarantee Scheme until end of H1 2021. CBA has also announced new variable rates from as low as 2.6 percent for secured loans under the Government’s SME Recovery Loan Scheme, another Government measure designed to stimulate growth and support businesses through their COVID recovery. Unsecured loans are available with rates from 3.25 percent pa.
“Asset financing across a number of sectors within CBA’s Business Bank continue to surge as businesses restock and invest in new assets. The construction industry in particular, has benefited from multiple government stimulus packages, including record investments in public infrastructure projects and the Homebuilder grant. We’re also seeing strong demand for vehicle financing and machinery, particularly in the food manufacturing and agriculture sectors. In fact demand for agriculture machinery is the highest we’ve seen in several years” stated CBA Executive General Manager Business Lending, Clare Morgan.
“Many businesses are also taking advantage of CBA’s Energy Efficient Equipment Financing (EEEF) which rewards customers with a 0.5 per cent discount on financing for energy efficient vehicles, equipment and projects. In the agriculture market, we have seen significant growth in the second half of the year as supply and confidence has grown. Government incentives have helped stimulate this growth and we’ve seen thousands of our customers take advantage of the instant asset write-off scheme over the past year alone, so it’s great the Federal Government has extended the scheme for another year” added Ms Morgan.