Saturday 25 January 2020

Bank of Ireland says lending to SMEs is up by 25pc

Peter Flanagan

BANK of Ireland said it has increased lending to small and medium enterprises by a quarter so far this year, and expects to comfortably beat its government-imposed lending targets.

Launching its 'National Enterprise Week', the country's largest bank claimed it had handed out €1bn in new funds to small firms since the beginning of the year, and was on track to hit its target of €4bn by the end of 2013. That is up from €3.5bn last year.

The bank says its approval rate is up at about 85pc so far this year. While there has been some uptick in lending requests this year, Bank of Ireland's head of small business lending said demand for credit was still low.

"We can't get the money out, the demand is not there," said Mark Cunningham. "Businesses have been deleveraging. We have seen an increase in working capital utilisation in the first quarter and that is the first we have seen of some momentum.

"About 37pc of credit for working capital was taken up at year-end, that rate is now up at 42 or 43pc and commercial finance are also showing high levels of utilisation but businesses aren't looking to spend on capital expenditure, M&A, or property acquisitions. There is a bit of momentum which we are hoping will carry through and the numbers are much better but it is off a low base.

"We did €3.6bn in new and increased SME lending last year, but only €1.8bn was drawn down and €2bn repaid, so our book actually fell by €200m last year. We can approve it but it then has to be drawn down," he added.

Both AIB and Bank of Ireland have a government target of lending €4bn to SMEs this year.

AIB said it "expects to meet its lending target of €4bn this year and the pipeline of credit across our business centres is growing.

"This growth is across a number of sectors including services, retail, agriculture, manufacturing, medical and tourism.

"Last year, AIB sanctioned €4.8bn in SME credit and is confident it will achieve its lending target for 2013," the bank added.

The figures came as research from think-tank the ESRI found that only one in nine SMEs is struggling because of "credit constraints".

Despite that conclusion, the institute warns that the proportion of businesses complaining of a lack of access to credit has surged to nearly a quarter of all SMEs since 2009.

Irish Independent

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