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Canada's Magazine for Financing & Leasing Executives

September 15, 2014

PayNet's latest report suggests Canadian commercial lending cooled during second quarter

Toronto--The lastest report from PayNet reveals that many Canadian businesses may be stalling their borrowing during the low risk expansion phase of their business activities as they slow down investment and look to control their financial risks.

The new research shows that The Canadian Business Lending Index (CBLI) declined 2 percent to 213 compared to Q1 2014 but increased 7 percent compared to Q2 2013. Since 3rd quarter 2011, Canadian businesses invested at a rapid rate, increasing overall investment by 55 percent through 4th quarter 2013.

This latest release shows that Canadian businesses have satisfied their investment into PP&E so they have throttled back the pace.

Bill Phelan, PayNet's president, said “This latest release shows that Canadian businesses are 'full' on their investment into PP&E so they have throttled back the pace. This latest release is no surprise as the double digit pace of investment became unsustainable.”

Investment remains heavy in the western part of the country, with Saskatchewan and Manitoba, and BC and Alberta taking a larger share of the CA economy.

Capital investment moderated in Q2 2014 but was still above Q2 2013, while higher loan delinquencies coincide with increased investment.

The CFLA Business Credit Delinquency (BCD) moderate loan delinquencies averaged 1.90 percent in Q2 2014, a decrease of 13 basis points compared to Q1 2014

While moderate delinquencies declined since 1st quarter, they remain higher than comparable loan delinquencies in the U.S., which were 1.51 percent.

The CFLA BCD severe loan delinquencies increased just 1 basis point to 0.38 percent (vs. 0.30 percent in the U.S.) since last quarter

The Canadian Business Lending Index (CBLI) measures the volume of new commercial loans and leases to small businesses indexed so that January 2005 equals 100. Because small businesses generally respond to changes in economic conditions more rapidly than larger businesses do.

The CFLA Business Credit Delinquency (BCD) Trends reflect the percentage of Canadian businesses that are more than 30 days past due or 90 days past due with Canadian finance companies. The BCD Trends measure small business financial stress and provide an early warning of future insolvency.

PayNet, Inc. provides risk management tools and market insight to the commercial credit industry, collecting real-time loan information from leading Canadian lenders and turning it into actionable intelligence. The company's proprietary database -- updated weekly -- is a growing collection of commercial loans and leases, worth over $58 billion. Using state-of-the-art analytics, PayNet converts raw data into real-time market intelligence and predictive information that subscribing lenders use to manage risk, lower operating costs, originate more loans and improve their business strategy.



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