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CFA’s Q3 2016 Asset-Based Lending Index

CFA’s Q3 2016 ABL Index Reveals Increased Commitments and Improved Utilization

Gross new commitments higher than same quarter in 2015

 

This Quarterly Asset-Based Lending Index was developed to help Commercial Finance Association members and external constituencies monitor industry trends. 24 of the largest CFA members engaged in asset-based lending provided data for this Index.

The mix of reporting members changes from time to time. Also, they occasionally revise previously reported data. In these instances, data from prior indices is restated.

 

Business Development
Total committed credit lines in 3Q 2016 increased 0.6% over the prior quarter. Compared to the same quarter in 2015, total commitments grew 8.3%.

 

Lenders’ new credit commitments in 3Q 2016 were 17.6% higher than the previous quarter and 33.3% higher than the same quarter in 2015.

Credit line utilization as of September 30, 2016, was 41.5%. This was higher than the previous quarter (40.1%) but lower than the same quarter in 2015.

 

Portfolio Performance
Lenders’ non-accruing loans in 3Q 2016 as a percentage of total asset-based loans outstanding were lower than the previous quarter.

 

 

22% of lenders reported an increase in non-accruals in 3Q 2016 compared to the prior quarter. In 2Q 2016, 17% had reported an increase.

With respect to gross write-offs, no lenders reported an increase in 3Q 2016 compared to 22% in 2Q 2016.

            

Gross write-offs as a percentage of total asset-based loans outstanding continued to be within historical ranges.

Download the 2016 Q3 Index:

 

The report is based on a survey of asset-based lenders (ABLs). The results show growth and increased activity on multiple fronts. For larger lenders, commitments and asset-based loans outstanding were up. Utilization improved. Gross new commitments were higher than in the same quarter of 2015. Regarding portfolio performance, non-accruals improved while gross write-offs stabilized in Q3.

“The new credit commitments and higher total credit commitments reflect an economy that’s growing nicely,” said Robert Trojan, Chief Executive Officer of the CFA. “This is good for our industry. Companies are building up inventories and adding working capital. It looks promising.”

 



The CFA ABL Index showed that loan outstandings increased by 4% from the prior quarter, with a 7.8% gain over Q3 2015The increase is primarily due to new commitments, with loan utilization at 41.5% is almost at the same level as Q3 2015. Gross new commitments for Q3 2016 were 17.6% higher than the prior month, but these were balanced by a similar increase in loan runoff, indicating that much of the market activity is movement of borrowers from one lender to another. Gross new commitments for the quarter represent about 4% of the overall committed credit lines.

Non-accruals have been rising since Q1 2015, but the Q3 2016 results show a stabilization with a slight drop in non-accruals down to 0.57%. No lender surveyed reported an increase in gross write-offs, which remained steady, while net write-offs showed a slight decline.

CFA’s Quarterly Asset-Based Lending Index was conducted by R.S. Carmichael & Co., an independent market research firm. CFA has tracked asset-based lending activity and published the Quarterly Asset-Based Lending Index since March 2008 to provide insight on national commercial lending activity.

  

ALSO VISIT OUR RECENT REPORTS:

Asset-Based Lending Index 2016 Q2

Asset-Based Lending Index 2016 Q1

Asset-Based Lending Index 2015 Q4

Asset-Based Lending Index 2015 Q3

Asset-Based Lending Index 2015 Q2

Asset-Based Lending Index 2015 Q1

 

ANNUAL ASSET-BASED LENDING AND FACTORING SURVEY

These industry surveys are based on data reported by 35 of the largest asset-based lenders and factors. This report contains highlights of the surveys. CFA members actually submitting data have received more detailed reports.

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tim Atkinson

Director, Membership, Education & Chapter Support

tatkinson@cfa.com

 

Michele Ocejo

Editor-In-Chief

mocejo@cfa.com