With 73 percent of survey respondents (75 percent in 2011) reporting that they do not intend to make changes to their banking relationships over the next 12 months, it would seem that many businesses appear to be getting on reasonably well with their banks. Only 11 percent had changed their main business banking relationship during the previous 12 months; 16 percent plan to make a change in the coming year.
Less than a quarter of this year’s respondents believe their bank has a poor knowledge of their business. Tellingly, two thirds of the surveyed companies say they would be prepared to recommend their bank to others. This figure is virtually unchanged since our 2011 survey.
|Figure 1: Constraints on capital expenditure (% of responses)
A majority of respondents are not experiencing any increase in their banks information requirements. Of those that have been asked to supply additional information, more than 90 percent are handling these requests well or very well.
Interestingly, 35 percent of respondents are largely ungeared with their borrowings amounting to less than 2 percent of their assets.
Companies also appear to be scaling back their investment plans in response to deteriorating conditions. In 2011 just over 55 percent of respondents reported major investment plans. This year the equivalent figure has fallen to 45 percent. A significant number (47 percent) of respondents feel their banks have tightened credit over the past year, however 40 percent of them are planning to obtain additional bank funding this year.
Forty-one percent report experiencing capital expenditure constraints over the past 12 months. The equivalent figure for 2011 was 33 percent. Among those experiencing investment constraints, the cost of debt and the availability of credit are seen as the main obstacles to capital spending.