Increased borrowing may bolster big banks BUSINESS borrowing intentions have risen to the highest level since the global financial crisis, signalling a potential revenue boost for the banks as corporate Australia looks to address five years of underinvestment. A study by Asia-Pacific business banking research firm East & Partners says borrowing intentions have rebounded to the highest level since April 2008 as demand for equipment finance rises. "Given this we believe the economic backdrop is starting to become conducive for a second-half 2013 increase in business lending, particularly if volatility remains low," said Macquarie analyst Mike Wiblin, who upgraded earnings for the major banks by 1-3 per cent on the data. The study confirms the two-speed economy is "alive and well," with a growing appetite for borrowing by firms in Western Australia and Queensland, but little change in NSW and Victoria. But it may ease fears of a looming bad debt cycle for the banks - a concern among investors. Mr Wiblin upgraded National Australia Bank, the largest lender to the small and medium enterprise sector, to "outperform" (an effective "buy"). The trend also bodes well for CBA's asset growth, given its strong position in the corporate lending market, and ANZ, due to its large institutional bank. It comes as businesses look to boost productivity through technology, with AMP and David Jones chairman Peter Mason telling a business lunch last week firms were forced to "invest for the future" as several sectors dealt with structural challenges. DJs is boosting its online sales capabilities, while NAB is spending $1.3 billion this year on technology systems. The East & Partners study, done in collaboration with Macquarie, says most businesses are not expecting a significant rise in stress over the next six months. Smaller firms are less optimistic, due to a lack of confidence, the availability of debt and political and regulatory uncertainty. But Mr Wiblin said these concerns could be allayed if the major banks became more optimistic about the economy and the need to finance its "next leg of growth." CBA chief Ian Narev last month said his "base case" was for a "slow but steady" rebuild in confidence this year. With mortgage growth at its weakest in more than three decades and annual business lending growth at under 3 per cent, fears have grown that the banks may relax credit standards to boost business loans. But Mr Wiblin said the rise in borrowing intentions showed conditions were improving.