As I mentioned a couple days ago on the blog, FICO’s most recent quarterly survey of bank risk officers gave us plenty of positive signals. In addition to anticipating a drop in delinquencies, bankers are expecting the “credit gap” to narrow in the coming months.
Our survey of more than 200 bankers found that expectations for credit demand and credit supply are nearing equilibrium. While 53% of respondents expected the amount of credit requested by consumers to increase, 50% expected the amount of credit extended by lenders to increase. That is the closest these numbers have been in the past year, suggesting that lenders will begin to meet the pent-up demand for consumer credit.
Unfortunately, small businesses still face an expected credit gap. But even here, there is a silver lining -- access to credit appears to be expanding. In the latest survey, 84% of respondents expected credit demand to increase among small businesses. That compares to 60% who expected credit supply to increase. Clearly, a significant gap remains. However, only 37% of respondents in the Q4 2010 survey expected the credit supply for small businesses to increase. So, it appears bankers are anticipating an expansion of small business lending in 2011.
You can view the full survey report or watch FICO’s CEO Mark Greene on CNBC Squawk Box talking about the implications of the survey results.