Bank of Canada : Senior Loan Officer Survey - Fourth-Quarter 2015

Senior Loan Officer Survey - Results of the Fourth-Quarter 2015 Survey

Senior Loan Officer Survey

on Business‐Lending Practices in Canada Results of the Fourth‐Quarter 2015 Survey | Vol. 8.4 | 11 January 2016

This Senior Loan Officer Survey (SLOS) focused on changes to

business‐lending practices in the fourth quarter of 2015.

• Survey results suggest that overall business‐lending conditions tightened slightly during the fourth quarter (Chart 1). This was driven by a tightening of non‐price conditions, while price conditions were almost unchanged (Chart 2). 1, 2

• Similar to the third‐quarter survey, the tightening in lending conditions was almost exclusively concentrated in the oil and gas sector.

• Both price and non‐price conditions tightened for corporate borrowers but showed no change for small business and commercial borrowers.

• Overall demand for credit was roughly unchanged, albeit

  Chart 1: Senior loan officers reported that overall lending conditions for Canadian non‐financial firms tightened slightly…

  Overall business‐lending conditions: Balance of opiniona

  
  

  Tightening

  
  

  Easing

  
  

  1999 2001 2003 2005 2007 2009 2011 2013 2015

  
  

  % 100

  
  

  80

  
  

  60

  
  

  40

  
  

  20

  
  

  0

  
  

  -20

  
  

  -40

  
  

  -60

  with a slight tendency toward lower demand from all categories of borrowers.

• The balance of opinion is calculated as the weighted percentage of surveyed financial institutions reporting tightened credit conditions minus the weighted percentage reporting eased credit conditions. Thus, a positive balance of opinion implies a net tightening. The chart shows the average of the balances of opinion for the price and non‐price dimensions of lending conditions.

• Accessibility to capital markets for non‐investment‐

grade corporate borrowers decreased in the fourth quarter of 2015 but remained unchanged for prime and other investment‐grade borrowers.

Chart 2: …driven by a tightening in non‐price conditions

Price and non‐price lending conditions: Balance of opiniona

% 100

80

Tightening 60

40

20

0

Easing

-20

-40

-60

1 The SLOS defines the pricing of credit as spreads over base rates rather than as the

1999 2001 2003 2005 2007 2009 2011 2013 2015

Price Non-price

-80

level of rates.

2 Note that the balance of opinion suggests only the direction of the net change in

lending conditions; it does not provide information on the magnitude of the change.

a. The balance of opinion is calculated as the weighted percentage of surveyed financial institutions reporting tightened credit conditions minus the weighted percentage reporting eased credit conditions.

Note: Each series is the simple average of the balances of opinion for the small business, commercial and corporate sectors.

The Senior Loan Officer Survey collects information on the business‐lending practices of major Canadian financial institutions. In particular, the survey gathers the perspectives of respondents on price and non‐price terms of business lending and on topical issues of interest to the Bank of Canada. The survey is conducted quarterly, near the end of the quarter for which the results are reported. The fourth‐quarter survey was conducted between 7 and 11 December 2015. Additional information on the survey is available on the Bank of Canada's website. The survey results summarize opinions expressed by the respondents and do not necessarily reflect the views of the Bank of Canada.

ISSN 1918‐3968