Banks highlight huge equipment finance demand

CBA and NAB record massive rises in commercial vehicle lending

Two of the nation’s biggest banks have given a snapshot of how the economic rebound is being reflected lending demand for road equipment.

Bank executives ATN speaks to note a coalescing range of inputs for this bullish sentiment.

Commonwealth Bank Australia

Commonwealth Bank Australia (CBA) is bullish on the economy’s performance and how it has translated into demand for finance for plant and equipment purchases.

Australian businesses continue to kick back into gear, with new asset finance figures from the CBA revealing a 36 per cent increase in business car financing compared with the same time last year.

CBA’s latest vehicle asset financing figures have seen an increase over the past year that it breaks down this way:

heavy trucks – 50 per cent
light commercials – 187 per cent
utes and vans – 85 per cent
new motor vehicles including passenger and SUVs – 36 per cent.

The CBA notes that its financing data aligns to recently released VFACTS industry trends, which show vehicle registrations for business use have increased 24 per cent since January, and 48 per cent from April to May.

“Despite existing challenges around supply, both the CBA financing data and industry trends point to continued positive signs from the automotive industry,” CBA’s executive general manager, business lending, Clare Morgan, says.

Clare Morgan

“This seems to be especially the case when it comes to business registrations of light commercials, utes and vans.

“There’s a general expectation that we’ll see an uplift in both financing and registrations of business vehicles as we approach the end of financial year.

“We’ve seen the federal government’s instant asset write-off scheme support many of our customers in the past year.

“We expect this demand to continue following the recent budget announcement, and we welcome the extension of the scheme until mid-2023 as a major boost for Australian businesses.”

National Australia Bank

Data released by National Australia Bank (NAB) shows businesses across Australia are purchasing new equipment and vehicles in record numbers as companies embrace the strongest market conditions seen in years.

Following 2020, where businesses across the globe were forced to ‘pivot’ their business through the pandemic, this year, Australian businesses are investing to build on the opportunities uncovered.

Overall, NAB’s agricultural equipment finance sales are up 134 per cent year-on-year (YOY) in 2020, demonstrating real strength across regional Australia, while industries like manufacturing have also increased 130 per cent YOY.

The market was telling NAB a different story two years ago

NAB executive regional and agribusiness Julie Rynski, says customers were taking advantage of strong business conditions and confidence while the government’s instant asset write-off scheme had been key to stimulating investment.

“When businesses start purchasing equipment, it’s a real signal to us that farmers and regional businesses are in a phase of growth and expansion,” Rynski says.

“With business confidence at an all-time high and businesses building on things they’ve learnt through the pandemic, I’m not surprised that equipment sales are so high.

“The majority of farmers and regional businesses have proven to be exceptionally resilient through two years of challenging conditions and are now poised to capitalise on new opportunities and brilliant market conditions.”

Julie Rynski

Rynski says the bank did not expect current demand for equipment finance lending to ease any time soon.

“If we continue to have favourable seasonal conditions, we expect this level of investment in agricultural equipment to continue for the next 15 months,” she adds.

The YOY increases according to NAB’s figures are:

Trucks/trailers/buses – 145.53 per cent