Are things going to get better in 2011? Recent increases in corporate lending may give us a reason to start the new year feeling optimistic.
Last week there was a positive article on the front page of the Wall Street Journal titled "Banks Open Loan Spigot". In the article, Ruth Simon reported that after nearly two years of declines in corporate loan numbers, there was actually an increase in commercial lending in the fourth quarter of 2010. Though the increase was small, and lending rates remain nowhere near the levels we saw in 2008, bankers from major institutions such as Wells Fargo, Bank of America, JPMorgan Chase, PNC and others are quoted as saying they expect corporate lending will continue to increase in 2011.
Some of the growth may be expected in specialized areas such as asset-based lending and retail finance. And, though some companies remain cash-rich, some small growth may appear in credit usage rates, which also rose toward the end of the year at some institutions.
What does this mean for all of us? Certainly, we would all hope that the trend continues - and grows. An increase in the volume of corporate loans can generate not only greater opportunities for the lenders and businesses involved, but also (eventually) opportunities for growth in the economy as a whole. Here's hoping for a very happy 2011!