The Commonwealth Bank of Australia (CBA) recently released new data showing marked asset finance growth for the month of May, which saw equipment investment surge 21 per cent compared with the same period last year, as businesses took advantage of the government’s manufacturing strategy and those working from home invested in computers.
CBA’s executive general manager of business lending, Clare Morgan, said asset financing has seen significant growth across a host of sectors within CBA’s business bank as businesses restock and invest in new assets.
She said the construction sector lent heavily into investment, as government stimulus and infrastructure projects, like the HomeBuilder grant, incentivised spending.
“We’re also seeing strong demand for vehicle financing and machinery, particularly in the food manufacturing and agriculture sectors,” Ms Morgan said. “In fact, demand for agriculture machinery is the highest we’ve seen in several years.”
But the construction industry has shown the biggest financing surge. Year-on-year, investments in excavators have jumped by 191 per cent and other earthmoving equipment by 121 per cent.
Meanwhile, the agriculture industry has seen spending bumps in energy-efficient equipment like low-emissions tractors, for which spending rose by 88 per cent, and loaders, which have been invested in 73 per cent more than they were during the same period last year.
“Many businesses are also taking advantage of CBA’s Energy Efficient Equipment Financing (EEEF) which rewards customers with a 0.5 [of a percentage point] discount on financing for energy-efficient vehicles, equipment and projects,” Ms Morgan said.
“In the agriculture market, we have seen significant growth in the second half of the year as supply and confidence has grown.”
The financing figures also reflect a positive response to the Morrison government’s $1.5 billion Modern Manufacturing strategy, as investment in welding units rose by 112 per cent compared with May last year, and spending on compacts jumped by 32 per cent over the same period.
Working-from-home arrangements, too, are shown in the bank’s financing figures. According to CBA, spending on desktop computers jumped by 75 per cent over the last year, while laptop investments surged by 75 per cent.
“Government incentives have helped stimulate this growth and we’ve seen thousands of our customers take advantage of the instant asset write-off scheme over the past year alone,” Ms Morgan said, “so it’s great the federal government has extended the scheme for another year.”
The bank’s vehicle asset finance figures show that total car financing has increased by 35 per cent over the last 12 months. Meanwhile, spending on automotive repair equipment has jumped by 93 per cent.
CBA suggests that higher rates of investment in repair equipment follow supply chain interruptions imposed upon Australian consumers as a result of the pandemic, which also saw the emergence of a “buoyant” used-car market.
The figures also showed that spending on light, commercial vehicles between 2,000 and 3,500 kilograms rose by 136 per cent over the last year, as many took advantage of the government’s manufacturing and construction stimulus.