The asset-based lending industry did not experience the dramatic first quarter bump evident in the broader U.S. economy, but it still grew and so did lenders’ confidence in the market, according to data released by the Secured Finance Network as part of its quarterly Asset-Based Lending Index and SFNet Confidence Index.
“While asset-based lending recorded modest growth in the first quarter compared with the nation’s 6.4% rise in GDP, lenders expressed greater confidence in four of the five indicators used to gauge market sentiment,” Richard D. Gumbrecht, CEO of SFNet, said. “They understand asset-based lending is critical to finance and the economy, and they anticipate continued growth as the economy recovers.”
Survey Highlights
For banks, asset-based loan commitments (total committed credit lines) increased slightly (0.4%) from Q4/20 to Q1/21 and 2.3% compared with Q1/20. Outstandings (total asset-based loans outstanding) rose 2.8% from Q4/20, representing a 36.4% decrease compared with Q1/20. Gross write-offs as a percentage of outstanding loans dropped by three basis points from Q4/20 — a historical in-quarter low — and 2.7 basis points compared with Q1/20.
For non-bank lenders, Q1/21 commitments grew 2.1% from Q4/20 and 15.1% compared with Q1/20. Total asset-based loans outstanding increased 11.2% from Q4/20 but decreased 3.4% compared with Q1/20. Survey results also indicated that new commitments decreased, returning to levels relatively consistent with most quarters since 2016.
Regarding their outlook for the ABL market, lenders were slightly more positive in Q1/21 compared with the previous quarter. Confidence in four of the five indicators increased, including confidence for new business demand, client utilization, portfolio performance and general business conditions. However, bank ABLs were more reserved about hiring expectations than in Q4/20 and non-bank ABL hiring expectations remained about the same.
SFNet surveyed 35 bank and non-bank asset-based lenders on key indicators for the survey.
