Bank of Ireland approves c. €1.24 billion in new credit excluding restructures to SMEs in first quarter of 2015 – up c. 24% on 2014

  • No 1 business bank with >50% market share of new SME/Agri lending
  • 12% increase in new credit applications in Q1, 2015
  • Motor, agri, property and retail sectors showing strong signs of growth

Bank of Ireland Business Banking has announced new credit approvals to SMEs to the end of March 2015 of almost €1.24 billion, up c. 24% on the same period last year. The €1.24 billion figure includes new and increased lending and does not include restructures.

The Bank received a total of over 17,500 credit applications in the period, an increase of c. 12% year on year and an increase of c.13% on the 15,428 applications were received in the final quarter of 2014. In addition, the rate of approvals remains constant, with approximately 87% of applications receiving approval. The Bank continues to be the main provider of new SME lending to the market, with >50% of the flow of new non-property lending, based on analysis of Central Bank data.

Bank of Ireland continues to see signs of improved optimism in the external environment and, in particular, increased demand for credit as the motor, agri, property and retail sectors show continued growth.

Commenting Mark Cunningham, Director of Business Banking, Bank of Ireland said: “The positive growth trajectory evident in the second half of 2014 continued in the first quarter of the year with signs of increased activity from a number of sectors. New car sales have been very buoyant in Q1 and our franchise sales business has been performing well ahead of the market. Data from the Society of the Irish Motor Industry earlier this month showed that new car registrations in Ireland for Q1 were up 30% on last year, running well ahead of even the most optimistic forecasts. Registrations during that period reached 64,716, up from 49,901 for Q1, 2014. Ireland ranked third in Europe for year on year growth in new car sales in Q1.

“Increased levels of activity in the agri sector have been primarily driven by land purchase and farm development as farming customers respond to the growth opportunity afforded by the abolition of milk quotas. Land purchase activity has increased and we are approving credit for approximately 500 acres on a weekly basis. In addition, many agri customers are now in a position to avail of long term land leases from other farmers thanks to the tax changes in recent budgets which support and incentivise longer term leasing.

“Our outlook for the agri sector remains positive. Annual seasonal loan requests are in line with previous years and, despite reductions in cereal prices last year, all indications are that cereal acreages will not reduce significantly in 2015. Beef prices in March this year were 7% higher than last year, supporting a buoyant market for young cattle being sold for turnout to grass. Despite reduced milk prices, cash flow remains strong across all sectors with less than 25% of all agri overdraft permissions actually drawn at the end of Q1.

“The pick-up in activity in the property market has continued into 2015. Property values, particularly in Dublin, have strengthened in line with improving economic fundamentals, with yields tightening due to the perceived depth of underlying occupier activity and rental growth expectations with recent media reports suggesting a new benchmark rent for Grade A office space at €60 per sq. ft. There has also been an increase in the volume of investment in secondary markets as investors move out the risk curve. The demand for finance in 2015 is primarily expected to come from refinancing opportunities where equity funds are recycling loan portfolios that they have acquired.

“Retail Ireland projects a strong increase of 2.7% in consumer spending in 2015 following growth of 1.3% in 2014. This is based on the continued improvement in the employment numbers which is driving income growth and spending power in the market. Convenience grocery retail and furniture/home retail operators in particular continue to benefit from the strengthening economic trading conditions. We remain committed to supporting long-term, sustainable growth plans for businesses operating within this sector and we continue to see a strong pipe-line of retail focused proposals”, concluded Mark Cunningham.


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