Friday 31 October 2014

BoI claims it has passed €3.5bn loans target for small firms

Published 18/12/2012 | 05:00

Bank of Ireland is set to confirm this week that it does not plan to tap shareholders for equity until next year. Photo: Getty Images

BANK of Ireland says it has hit its lending target for small business, and will exceed its government-mandated objective for the year.

In a statement yesterday, the bank said it had topped the target to increase lending by €3.5bn in 2012.

It means the target for lending to small- and medium-sized enterprises (SMEs) will be exceeded, even excluding restructuring facilities, the bank said.

That is a pointed response to some claims that lending statistics from a number of lenders have become unreliable because old loans restructured or re-issued have been counted as new loans in an effort to hit the lending targets.

Bank of Ireland insists there is no such ambiguity in its figures, saying the figures for new business lending include only new loans.

Market watchers say Bank of Ireland is now the dominant force in small business lending, and it also holds a market share of around 40pc for new mortgage lending.

Both segments of the market are set for more increases thanks to a target of boosting overall lending by a further €3.5bn in 2013.

Both Bank of Ireland and Allied Irish Banks were ordered to supply at least €3.5bn of credit to SMEs in 2012. AIB has already hit its target and claims it will have doled out some €3.75bn in credit by the end of this month.

Next year the target will increase to €4bn each per annum.

The banks' efforts to achieve these aims have been closely watched over the past two years. Last year the head of the Credit Review Office, John Trethowan, said both lenders would be "challenged" to hit their lending target, but a late push by both firms got them over the line.

The €3.5bn does not have to be made up exclusively of new lending. It also includes loan restructuring and extension of overdrafts. However, Bank of Ireland said it had met its challenge even excluding restructuring facilities.

The group's director of business banking, Mark Cunningham, said his firm had seen higher demand from several sectors of the economy.

"We have seen particular increases in demand from customers in the healthcare, manufacturing and hospitality sectors, while agri lending has also remained strong.

Loan finance

"Increased demand for asset and commercial loan finance has also been a feature.

"Lending to Dublin businesses was up by 27pc, and with over 40pc of businesses located in the capital this indicates that confidence is slowly returning, as evidenced by the growth we have been seeing in credit demand from viable businesses in the second half of this year," he added.

Despite the fact that both 'pillar banks' have exceeded their targets, access to credit remains a major problem for the SME sector.

Last week a survey from trade group ISME found more than half of all credit applications from small firms were being rejected.

The lending figures came as BoI said it would run a series of free SME lending clinics next year to explain the lending application process to start-up and micro-sized businesses.

Irish Independent

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