Companies are still desperate to see the national cash rate fall from its current level of 3.5 per cent. Entrepreneurs were left disappointed yesterday (July 3rd) when the Reserve Bank of Australia (RBA) decided against a third successive monthly interest rate reduction. While the move was hardly surprising, Australian Chamber of Commerce and Industry economics director Greg Evans believes further action is required to stimulate economic growth. Dow Jones Newswires reports that uptake of business loans reached a three-year high in May, according to figures released by the Australian Prudential Regulation Authority. This clearly shows that firms are increasingly looking to expand, but Mr Evans feels that they need a helping hand from the RBA and he fully expects interest rates to fall again in the next six months. He told the Australian that organisations in certain sectors may not have felt the benefits of the recent 75-point rate cut just yet and instability in Europe could prompt the RBA to make more reductions. Have a question about business banking? Ask the money gurus at Mozo Answers.
The uptake of business loans by Australian firms reached a three-year high in May, new figures have indicated. According to the Australian Prudential Regulation Authority, growth in lending to non-financial organisations went up by 7.2 per cent when compared with the corresponding month in 2011, Dow Jones Newswires reports. This also represented a one per cent hike on figures for April 2012. Out of the nation's "big four" lenders, only the Commonwealth Bank saw its share of the business market fall, while Westpac, National Australia Bank and ANZ all made gains. However, Goldman analyst Ben Koo told the news provider that people should not get too carried away with the upturn and he feels it does not signal a "sustained turnaround in business lending". His comments come shortly after the Sydney Morning Herald reported that European banks have significantly scaled back the number of corporate loans being issued down under. Barclays economist Kieran Davies said European institutions have reduced their business lending in Australia by 30 per cent since 2009. Have a question about business banking? Ask the money gurus at Mozo Answers.
Some of China's most prominent banks are looking to increase their influence down under. According to the Wall Street Journal, renowned institutions like the Industrial & Commercial Bank of China (ICBC) are planning to "muscle in" on Australia's syndicated loan market. Leaders at the bank are looking to issue more business loans to support major projects across the country – and the booming mining sector represents an ideal investment opportunity. Many economists believe that Australia has a "two-speed economy" that separates the majority of companies and enterprises in the hugely lucrative mining industry. The government recently announced that some resource projects that are in the pipeline will require a further $450 billion of funding to complete. However, Han Ruixiang, the Sydney-based head of Australian operations for ICBC, told the news provider that the lender would not be solely concentrating on this sector. "We have a strong interest in resource deals but we're not focusing only on them; as a commercial bank we lend across the board," he was quoted as saying. Have a question about business banking? Ask the money gurus at Mozo Answers.
With so many companies battling to remain profitable, it is encouraging to see that organisations have been receiving healthy internet orders. New figures published by the Australian Bureau of Statistics have shown that firms benefited from online purchases worth $189 billion in 2010-11. This would have been an absolute godsend for retailers in particular, as it is clear that Aussies are being more cautious with their cash because of the uncertain economic climate. The proportion of corporations that said they received orders via the web went up from 13 per cent in 2009-10 to 28 per cent the following year. Enterprises have had an exceptionally hard time of things in recent years and many have found it very difficult to get hold of much needed business loans from the nation's banks. It is crucial for the wider economy that corporations are able to expand, but lenders have been far more strict about who they give money to. Have a question about business banking? Ask the money gurus at Mozo Answers.
The last few years have been difficult for company owners to say the least and many have been forced to access credit in order to stay afloat. Business loans are crucial if firms want to successfully expand, but it does mean taking on a lot of extra debt. Plenty of enterprises are blighted by the huge fees attached to their loans, but thankfully these appear to be rising at a more subdued rate. The Australian Bankers' Association (ABA) has revealed that revenue from business banking transaction charges grew by 5.5 per cent last year. While this is clearly worrying, it is a far more palatable figure than those reported in recent years. In 2009 and 2010, some lenders hiked their loan fees by as much as 20 per cent, but this has since fallen considerably. The ABA study also found the country's two million small businesses have borne the brunt of the fees. Have a question about business banking? Ask the money gurus at Mozo Answers.
Getting a small enterprise up and running is not easy at the best of times, but it is nigh on impossible when the economy is shaky. The economic downturn has made it extremely difficult for entrepreneurs to launch their organisations and access to business loans has become very restricted, as banks are not willing to take unnecessary risks. It was no surprise when Roy Morgan Research revealed earlier this month that confidence levels among Australian firms are at their lowest ebb since August 2011. According to the latest MYOB Business Monitor, people are taking drastic measures to keep their companies afloat, the Sydney Morning Herald reports. Around 87 per cent of small and medium-sized enterprise owners said they have had to make some sort of sacrifice for the good of their business. Nearly one in three do not take any holidays at all, while 21 per cent have had to take on a second job in order to boost their income. Have a question about business banking? Ask the money gurus at Mozo Answers.
Companies throughout Australia had hoped that recent interest rate cuts would have made it far easier for them to secure business loans, but many are still struggling. The main issue is that banks and lenders have not been keen to pass on cuts made by the Reserve Bank of Australia in their entirety – and a lot of firms are put off from taking on credit because of the poor rates. According to director of economics at the Australian Chamber of Commerce and Industry Greg Evans, the pass-through in rates has been "reasonable". He told the Sydney Morning Herald that one of the biggest problems is that lenders are not notifying their customers of rate fluctuations and so there is a distinct lack of transparency in the sector. This ties in with recent findings published by Roy Morgan Research, which indicated that satisfaction levels among business banking customers continue to fall. Mr Evans said: "What is not helping business confidence is the uncertainty around banks notifying their pricing decisions and the delayed implementation of changes."
The number of business banking customers who are happy with the service they are receiving continues to fall. New figures released by Roy Morgan Research have shown that satisfaction levels declined by 0.8 points to 64.3 per cent in May. This is the third consecutive monthly drop and it indicates that more disillusioned companies are looking to switch lenders. Times are certainly hard for enterprises down under, as a separate study by the organisation showed that general confidence levels in the corporate world are on the wane. Industry communications director at Roy Morgan Research Norman Morris said that a lot of firms are upset by the lack of contact they have with their business loan provider. "It would appear that the banks are doing a relatively poor job of meeting the more complex and potentially riskier needs of their business customers," he remarked. Satisfaction levels among corporate banking customers are around 14 per cent lower than personal clients. Have a question about business banking? Ask the money gurus at Mozo Answers.
Leaders at the Commonwealth Bank of Australia (CBA) believe that the dollar will start to fall in value, but this will not be enough to please companies down under. Many business banking customers have bemoaned the strength of the currency, as it has made it far more difficult to export goods overseas. The dollar has been above the 91 US cents mark since 2010 and this has crippled a lot of Australian firms. Currency strategist at the CBA Joseph Capurso believes companies need to restructure and significantly increase their productivity if they are to survive. "The reality is that despite a predicted easing of the Aussie dollar, there will not be enough of a fall in the dollar for exporters to feel significant relief," he remarked. There is evidence to suggest that enterprises are doing all they can to remain profitable, as 89 per cent of exporters said they are producing more goods to counterbalance the difficult global trading conditions. Have a question about business banking? Ask the money gurus at Mozo Answers.