Demand for credit on rise for first time since 2007
Latest Central Bank data shows fresh confidence
DEMAND for credit from Irish businesses has finally turned the corner.
New figures released yesterday show companies' loan demands edged upwards in the quarter to October, marking the first rise since January 2007.
And the country's banks are expecting further rises in the demand for credit over the next three months, with smaller businesses expected to lead the way.
Company borrowings are seen as a key indicator of economic confidence and recovery, since companies are more likely to seek credit when they see growth opportunities.
The data was revealed by the Central Bank yesterday and mirrors trends across the eurozone.
But while the recovery in corporate demand will be seen as a positive for the market, the data shows the resurgence is still in its early days.
The survey uses 3.00 as the mark between growth and decline -- overall credit demand from companies scored just 3.25 in October.
Demand from consumers also failed to break into positive territory, with mortgage loans staying marginally negative at 2.75 and other consumer credit recording a static 3.00.
Concerns about housing market prospects and consumer confidence are increasingly playing a role in depressing demand for borrowings, the survey reveals. The overall picture shows credit standards have remained "unchanged" for the three months to October, re-enforcing the tightness of lending conditions.
The costs of recapitalisating banks' balance sheets is listed as one factor that weighs on credit standards, along with the banks' liquidity positions.
The survey also charts the continuing difficulties Irish banks are having on the money markets, with inter-bank access to short-term money and access to debt securities like corporate bonds deteriorating.
Irish banks also indicated the impact of financial markets continues to depress their "willingness to lend" though the impact is gradually lessening.