Global Recovery? Canadian Bank Loan Declines Resume

The quantum of outstanding Canadian commercial bank loans dropped by another $2.6 billion during the month of September, the largest one month decrease since January 2009. This came on the heels of August data which suggested a slowing in the decline of business loans to the Canadian corporate and SME sector.

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
July: $176.61 billion
August: $175.738 billion
September: $173.118 billion

Commercial and corporate lending by chartered banks to Canadian-based businesses is down $18.8 billion year-to-date, or 9.8% of what was outstanding as of December 2008. The bland drop in August outstandings made one think that the worm was turning and that the availability of commercial credit was “not getting worse”.

Clearly that’s not the case.

Comments

[bob adamson:]

Historically Canada has entered recessions later than most mature economies but recession conditions linger longer. This reflects the large commodities component in Canada’s economy and the high international trade element in many sectors of that economy.

Canada fared especially well over the past two years because of the demand for commodities, the soundness of its financial and monetary situation and the strength of its banks but historic patterns may be reasserting themselves as this recession lingers.

Oct 25 09:38 PM

[bob adamson:]

The link below reports interesting recent comments by the head of Canada's central bank:

www.theglobeandmail.co.../

Oct 26 11:11 AM