ABARES. Lending to Australian Agriculture Financing the Farm

Transcription

1 ABARES Lending to Australian Agriculture Financing the Farm Khan Horne General Manager 6 th March 2012

2 Financing Australian Agriculture Today we will cover three topics: 1. What does a Lender look for? Agribusiness lending 2. Lending to Agriculture: What does the book look like? 3. The Agribusiness Deposit Market (Farm Management Deposits): Farmers have been and are making money! Note: Each red dot represents a Banking Centre (>600 NAB agribusiness bankers and 110 locations!) 2

3 Financing Australian Agriculture What Do Agribusiness Lenders Look For? 3

4 Five C s Cs of Financing The Farm Character Collateral l Capital The Five Cs C s Capability Cashflow 4

5 Financing Australian Agriculture Lending to Agriculture Credit is & remains available to the Industry We are open for Business! 5

6 Agricultural Lending by Segment Since 94 3 distinct periods growth in lending to agriculture. Dec 08 & Sep 11 Average Annual Growth Rate = 3.7% June 02 & Dec 08 Average Annual Growth Rate = 12.4% Sep 94 & June 02 Average Annual Growth Rate =88% 8.8% Lending Volume >$2m: $26,242m242m $500k to $2m: $19,968m $100k to $500k: $11,533m <$100k: $2,748m Total: $60,362m 6

7 Agricultural Lending Segmentation % of total outstanding Growth of 24% since 94 in $2m + segment 100% 90% 19% > $2m 80% 43% 70% 18% 17% 60% $500k to $2m 50% 40% 40% 33% $100k to $500k 30% 20% 10% 24% 19% <$100k 0% 5% Source: APRA Retraction of 40% since 94 in under $500k segments 7

8 Agricultural Lending Term & Tenor Hedging period 1-3 years provides customers IRRM comfort & flexibility for future strategic t planning for their business Term of Interest Rate Risk Transactions Term of Loan Approval Tenor: We are open for business & supporting the industry Source: NAB (Data is Core Lending >$250k ex. Mortgages & Overdrafts) 8

9 Financing Australian Agriculture The Agribusiness Deposit Market (Farm Management Deposits) Farmers have been and are making money! 9

10 Farm Management Deposits An Indicator of Industry Health FMD s, often referred to as a Lead Indicator to farm profitability and have been growing steadily over the past decade 3,500,000, 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 2,218,425 Farm Management Deposit volumes ($'000) Peaked $3.21b June 11 2,971,485 ( 23% ) FORESTRY & FISHING 2,396,861 2,567,087 2,561,184 2,323,196 2,455,867 2,415,325 DAIRY ( 4.6% ) ( 7.1% ) ( 4.7% ) ( 5.7% ) 2,184,702 ( -0.2%) ( -5.7%) INTENSIVE LIVESTOCK ( -6.7%) PIG SHEEP SHEEP- BEEF BEEF GRAIN - SHEEP/ BEEF GRAIN CROPS SUGAR HORTICULTURE 0 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Source: DAFF Note: Use the adjusted total for accurate number of holders and value of deposits, as the state/industry total includes "double counting" of holders that have more than one account and attribute them to different industries. The i Certain figures are aggregated to protect the confidentiality of individual FMD holders as detailed below: * South Australian sugar industry FMD holders have been aggregated with the respective New South Wales FMD holders. ** Northern Territory and Australian Capital Territory crops, grain, sheep and intensive i livestock industry FMD holders have been aggregated with the respective New South Wales FMD holders. *** Tasmanian pig industry FMD holders have been aggregated with the respective New South Wales FMD holders. Source: DAFF

11 Farm Management Deposits An Indicator of Industry Health Source: DAFF 11

12 FMD s Variance Sep 2006 to Sep 2011 (Total $)

13 FMD s Variance Sep 2006 to Sep 2011 (Total $)

14 Thank You I look forward to questions during the panel discussions