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Australian businesses have snapped up equipment and machinery in record volume during the last financial year, according to the major bank.
Commonwealth Bank’s (CBA) financial year results 2022, recorded the largest volume of new asset finance lending in the “bank’s history”, with businesses in agriculture, manufacturing, and production driving demand for equipment and machinery.
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According to the bank’s latest business data, assets such as forklifts went up by 49 per cent, trailers increased by 37 percent, and demand for cranes lifted by 26 per cent.
In addition, trucks increased by 13 per cent, while agriculture (such as harvesters, headers and all-terrain vehicles) and prime movers saw an 11 per cent increase in purchases.
Despite the rising cost of living causing some pessimism in consumer sentiment, NAB’s latest business data showed business confidence had continued to increase as company’s profits continued to rise during the pandemic.
National Australia Bank’s (NAB) Business Survey noted profitability had risen (to +17pts) that indicated that businesses are currently “able to absorb increased input prices” in part by passing these costs on to customers.
While businesses have been fairly optimistic, economists expect as household spending eases to reflect the low sentiment, businesses expenditure will follow.
Nonetheless, for the time being businesses have been “investing for their future”, according to CBA’s business data.
CBA group executive business banking Michael Vacy-Lyle said this growth in FY22 suggested most businesses were “still positive about the future” notwithstanding the impact of rising costs and constraints in supply chain.
“Australian businesses have proved resilient as we’ve adjusted to living with Covid-19,” Mr Vacy-Lyle said.
“Many have increased their investment in productive capacity to strengthen their businesses and are taking positive action to overcome issues including supply chain disruptions by refining procurement processes and asset management.
“This led to significant investment in new vehicles, equipment and technologies in FY22. Businesses are continuing to adapt their strategies in response to the changing operating landscape and ongoing uncertainties in the domestic and global environment.”
Looking across the states, the increase in funding for construction equipment and construction vehicles was largely driven by business demand in NSW, Queensland and Western Australia.
NSW saw a 93 per cent jump in finance for earthmoving equipment along with a 27 per cent rise in funding for trucks, while agriculture equipment in Victoria went up by 18 per cent.
In Queensland there was a 39 per cent rise in finance for earthmoving equipment, Western Australia saw a 22 per cent increase in earthmoving equipment, and there was a 42 per cent rise in finance for trailers and heavy haulers.
Resimac Asset Finance expands acquisition
Given the high demand in asset finance, the asset finance division of the non-bank lender Resimac Asset Finance has expanded its acquisition stake in equipment finance business Sonder Equipment Finance (Sonder), to have a majority share.
The move followed on from Resimac’s decision to take on a 15 per cent stake in the company last year.
Sonder co-founder Danny Tuttlebee, who has joined Resimac Asset Finance as its new head of sales, said that the asset finance market was “worth upwards of $120 billion”, making it an attractive market for brokers.
It is estimated that around 500 brokers are currently using Resimac Asset Finance, with more expected to join as the brand continues to form aggregator partnerships.
[Related: Resimac Asset Finance acquires stake in commercial finance company]
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