Secured Lending Confidence Index
The SFNet Confidence Index is based on survey responses from senior executives. Responses were collected in late April 2020 and focus on anticipated activity or conditions in the forward three-month period. As seen in the summary below, Bank and Non-Bank Lenders had similar responses this quarter with respect to economic outlook, however Non-Bank Lenders were more slightly more optimistic regarding how the economic disruption would impact their origination efforts. The SFNet Confidence Index responses are on a 3-point scale where a response of “1” indicates a decrease/decline, a response of “2” indicates that things are expected to stay the same, and a response of “3” indicates that the expectation is an improvement/increase.
All scores for both Bank and Non-Bank Lenders declined this quarter compared to Q4 2019. Bank Lenders’ forward outlook for business conditions and portfolio performance dropped materially to an average response of 1.13 and 1.00, respectively. Both bank and non-bank lenders felt that portfolios will deteriorate in the coming months as the impact of the COVID-19 pandemic begins to appear. Bank Lenders expect demand for new business to be stronger with an average response of 2.31. Portfolio utilization and hiring are expected to remain the same to slightly down. Non-Bank Lenders’ forward outlook for business conditions and portfolio performance also declined, but less dramatically than that of the Bank Lenders, with an average response of 1.40 and 1.50, respectively. Similar to Bank Lenders, Non-Bank Lenders believe there will be more demand for new business with an average response of 2.50. Non-Bank Lenders also expect portfolio utilization and hiring to remain the same to slightly down.