Bank of Ireland on track to meet its increased SME lending target for 2013

Bank of Ireland today (Sunday 7 April 2013) announced that it approved €1bn in new and increased lending to Irish SMEs in the first quarter of 2013, an increase of 25% on the same quarter in 2012 and a continuation of the strong growth momentum in approvals in Q4 2012.  The Bank said this reflects an overall pick up in credit demand from viable Irish SMEs and the Bank’s own activities and initiatives in support of its strategic objective to grow its business banking operations.

In 2012 Bank of Ireland approved €3.6 billion in new and increased lending to SME customers.  Bank of Ireland figures exclude restructured facilities. During 2012, the amount approved increased in each quarter.

Commenting, Mark Cunningham, Director of Business Banking, Bank of Ireland said:  “We saw growth in business approvals quarter on quarter last year and are pleased that an overall increase in demand linked to our own efforts has ensured that this momentum has, as anticipated, continued into 2013.  The growth in demand from viable businesses can be segmented into: –

  • Demand for credit from SMEs by application numbers being up across most sectors compared with 2012, with particularly strong growth in manufacturing, agriculture and the hospitality sectors.  Demand in the construction/real estate sectors continues to fall with application numbers down on 2012 levels.
  • An increase in demand for working capital (including overdrafts, unit stocking and invoice financing lines).  The uplift in working capital approvals includes a particularly strong uplift in motor unit stocking approvals following an increase in the number of key franchises won by the Bank.
  • Increased opportunities with customers of other financial institutions for refinancing by Bank of Ireland of existing debt and the provision of new facilities.

We are also seeing an increase in the utilisation of business overdrafts and working capital lines indicating an uplift in business activity for a number of our customers.  Looking at other trends with SME customers, there is obviously a time lag between the Bank’s new and increased lending facilities being put in place and their being utilised by customers.    This may be partially attributable to businesses sensibly coming for finance earlier in their investment planning stage.  In 2013 we are seeing some signs of increased planning by businesses for future investment on the back of increased business confidence.

In the micro finance sector (borrowing requirements of less than €5,000) activity was strong in the first quarter.  These businesses tend to be in the services, farming and retail segments, particularly sole traders.  A significant percentage of applications are for working capital.  We are pleased to see signs of re-investment by these smaller businesses.

We also continue to see a strong interest from the agriculture sector as farmers seek to consolidate land holdings and take advantage of current land prices.

Bank of Ireland continues to be a very key provider of finance to viable SMEs in Ireland.  Based on our own analysis of recently released Central Bank of Ireland data for new lending in Quarter 4 2012, we estimate that we are providing around 50% of all new non-property lending being advanced to SMEs in the Irish economy.

We are strongly supporting the key SME funding initiatives launched by the Government in 2012, namely the Credit Guarantee and Microfinance schemes. In addition, we are currently conducting a series of Credit Clinics for start-up and early stage business owners to assist them, and are currently planning our next Enterprise week programme throughout our Branch network which will take place from 17 to 24 May.

Bank of Ireland is on track to meet our lending targets for SMEs in 2013.  We have the strategic imperative, capabilities, capital and liquidity to increase our business in this key sector for us and for the overall economy.  We strongly encourage any SME with a borrowing requirement to come and talk to us through our extensive nationwide branch network”, concluded Mark Cunningham.