Miners most exposed to repricing

Banks are imposing tougher interest rate conditions on retailers, manufacturers, media companies and miners, as lenders take a cautious view towards more vulnerable or risky sectors.

Banks are imposing tougher interest rate conditions on retailers, manufacturers, media companies and miners, as lenders take a cautious view towards more vulnerable or risky sectors.

Figures published by Macquarie and research firm East & Partners show businesses in mining, retail, manufacturing and telecommunications were much more likely to have their interest rates "re-priced" higher by banks.

Miners, many of them squeezed by weaker commodity prices and the high dollar, were the most exposed to the trend. About 10 per cent of miners in the survey said their loans had been repriced - where banks pass on a relatively small share of rate cuts to borrowers - compared with an economy-wide average of about 6 per cent.

Macquarie's banking analyst, Mike Wiblin, said banks were repricing rates in sectors seen as higher risk. "I think they are taking a view on the risk of those sectors and they are pricing accordingly," he said.

The findings, from a survey of more than 30,000 companies, come as business credit growth continues to struggle. But in a tentative sign business demand for credit could be recovering, borrowing intentions were put at the highest level since the global financial crisis.

While many small businesses complained at facing prohibitively high interest rates during the global financial crisis, Mr Wiblin said the overall level of loan repricing had fallen from previous peaks. "It's a lot lower than it has been, but having said that, the guys that are being repriced are those in industries with weaker outlooks," he said.

Bankers have privately said they are cautious on lending to some companies in sectors battling structural change and the high dollar, such as retail and manufacturing.

Figures from the Reserve Bank show the value of outstanding loans to manufacturing businesses has fallen by a quarter in the last four years, while lending to construction companies is down 17 per cent.

At the other end of the spectrum, credit has grown strongly in mining, and companies in the utilities and financial sectors have endured much less "repricing" than average.

Brokers say any bounce back is likely to benefit NAB, the biggest lender to small and medium- sized businesses, and ANZ, the biggest in institutional lending.

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