Bank lending grows in February

Press, 16 March 1982, Page 35

Bank lending grows in February

PA Wellington Trading bank lending grew about 2.5 per cent in February, 1982; after allowing for normal seasonal fluctuations, the Reserve Bank announced in its weekly statistics, report. This was relatively rapid growth compared w’ith the increases during the* preceding four months (which averaged 1 per cent), being comparable with the rises recorded during the second and third quarters of 1981. . On the other hand, bank deposits grew slowly in February, 1982 (about 1 per cent). Bank lending has grown at rates at least as great as bank deposits in each of the last nine months, reflected in the latest annual percentage changes, which are 28 per cent for lending and 17 per cent for deposits (in the year to February, 1982). . Reserve assets have correspondingly fallen 15 per cent in the same period. Of bank lending, term loans are growing more rapidly than advances and discounts <42 per cent, compared with 21 per cent for the year to February, 1982). On the deposits side, time deposits are growing more

rapidly than demand deposits (19 per cent and 12 per cent respectively). The categories of borrowers accounting for most of the growth in bank lending continue to be the “personal” sector (for both housing and non-housing purposes) and “farming.” Increases in lending to these sectors were 46 per cent and 45 per cent respectively in the year to January 13. There have also been very large increases in lending to the “mining and quarrying” sectors, although the total value of loans to this sector is still small. The deposits of the public with the major financial institutions (M 3 are estimated to have grown 17 per cent in the year to January, 1982. Lending by the same institutions to the private sector (private sector credit) grew 28 per cent in the same period. Both of these increases are a little larger than the estimates for the years to November and December. 1981, but it is too early to judge whether this acceleration is temporary, or whether it represents a reestablishment of the increasing growth recorded during the first three quarters of 1981.

Money supply (Ml) grew’ 14 per cent in the year to January, slightly slower than over the year to December, but similar to the increases recorded during 1981 as a whole. The total selected assets of life insurance companies grew 12 per cent in the year to December, 1981, slightly in excess of the steady increases of 10 to 11 per cent recorded earlier in 1981 and in 1980. The value of housing loan approvals by major mortgage lending institutions was $274 million in the December, 1981, quarter. Mortgage approvals by trustee and private savings banks fell in the December quarter, after the rapid expansions earlier in 1981. On the other hand, mortgage approvals by the Housing Corporation arid life insurance companies were relatively high in December.

The fall in over-all approvals in December was confined to lending on existing houses — approvals for new house mortgages rose strongly in the December quarter in both value and number terms, the fourth consecutive quarter in which increases have occurred.