Biannual Survey of Suppliers of Business Financing, second half of 2018
Suppliers of business financing reported that outstanding credit granted to Canadian corporations rose $41.4 billion (+4.7%) from the first half of 2018 to $918.2 billion at the end of the second half of 2018.
Compared with the same period in 2017, total business credit outstanding increased by $84.1 billion.
The Bank of Canada's Senior Loan Officer Survey reported that overall business lending conditions eased slightly in the second half of 2018, mainly due to competition between lending institutions for corporate borrowers.
Total credit outstanding
Total business credit outstanding increased for borrowers in every industry sector. The "all other industries" category led the growth, up $11.6 billion (+7.4%) to $168.1 billion in the second half of 2018. This was followed by real estate and rental and leasing, up $8.5 billion (+4.9%) to $184.0 billion.
The growth in outstanding credit for real estate and rental and leasing has been steady, which reflects continued demand for real estate in the Canadian market. According to a report by CB Richard Ellis, a commercial real estate firm, new construction in Canada has increased recently, on higher demand, low vacancy rates and changing tenant needs.
The growth in outstanding credit for the real estate and rental and leasing industry was consistent with the data for the fourth quarter of 2018 from the Quarterly Survey of Financial Statements, which shows that borrowings for this industry increased 4.6% in the second half of 2018 compared with the first half of 2018.
Total business credit outstanding for an account authorization level of $5 million or more led the increase, up $36.0 billion or 5.9%.
Credit outstanding by instrument
Total term credit, which includes term loans and mortgages loans, increased $25.1 billion (+4.6%) to $565.3 billion at the end of the second half of 2018.
The increase came mainly from loans provided by major domestic banks (+$8.2 billion or +3.4%), followed by other banks, including foreign banks (+$6.9 billion or +9.8%), and credit unions and caisses populaires (+$4.1 billion or +5.3%).
Operating credit, which includes credit cards and lines of credits, increased $16.3 billion (+4.8%). Major domestic banks drove the increase, up 6.2% from the first half of 2018.
Total term credit disbursed during the second half of 2018 rose by $7.7 billion (+5.8%) compared with the first half of 2018 to $138.7 billion.
Lending to the "all other industries" category contributed the most to this growth, rising $1.8 billion (+9.5%) to $20.4 billion. Lending to other primary industries, which include mining, quarrying and oil and gas extraction, followed, up $1.0 billion (+8.0%) to $14.0 billion.
More than half of lending was disbursed by major domestic banks, accounting for $76.2 billion in the second half of 2018.
The total value of term disbursed for an account authorization level of $5 million or more was the main driver of growth, up $7.3 billion or 7.5%.
Total business credit in arrears rose 14.6% (+$416.1 million) to $3.3 billion for the second half of 2018, compared with $2.8 billion in the first half of 2018.
Credit accounts with an authorization level of $5 million or more made up the highest percentage of arrears, accounting for 36.6% of the total.
Note to readers
Data from the Biannual Survey of Suppliers of Business Financing for the first half of 2018 have been revised.
Information on the factors associated with the increase in new construction in Canada was taken from CB Richard Ellis' Canadian Real Estate Market Outlook (2019).
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).
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