Bank of Ireland approves c. €2.5 billion in new credit (excluding restructures) to SMEs in first half of 2015 – up c. 18% on 2014

  • No 1 business bank with >50% market share of new SME/Agri lending
  • 8% increase in new credit applications in H1, 2015
  • Agri, retail, hospitality, property and motor sectors showing strong signs of growth

Bank of Ireland Business Banking has announced new credit approvals to SMEs to the end of June 2015 of almost €2.5 billion, up c. 18% on the same period last year. The €2.5 billion figure includes new and increased lending and does not include restructures and corporate lending.

The Bank received a total of over 34,000 Business Banking credit applications in the period, an increase of c. 8% year on year and an increase of c.17% on the c.29,000 applications that were received in the final half of 2014. In addition, the rate of approvals remains constant, with approximately 88% of applications receiving approval. The Bank continues to be the main provider of new SME lending to the business market, with >50% of the flow of new non-property business lending, based on analysis of Central Bank data.

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

Commenting Mark Cunningham, Director of Business Banking, Bank of Ireland said: “The positive growth trajectory was evident across all the key sectors of the economy in the first half of 2015 with increased demand for credit. Our sector specialists continue to focus on the Bank’s growth strategy with both existing and new business and agri customers and they are confident that the demand will continue as the economic recovery gathers pace. Business owners are regaining the confidence to commit to overdue capital expenditure and are also tentatively considering new opportunities, a trend which we expect to accelerate as we move into 2016.

“The passenger car market was up c. 25% year on year at the end of June, whilst the light commercial market was up by approximately 56% on the same period last year. This strong growth is evidenced by the uplift in our motor approvals for both SMEs and the personal motor market.

“We are seeing increased activity in the hotels/hospitality sector which is not surprising given that the CSO recently announced a 12% year on year rise in visitor numbers for the five months to May and Dublin Airport reported the busiest May ever in its 75 year history, with 2.2 million visitors arriving. These figures show that Ireland appears to be on target for 10 million visitors in 2025 which is expected to yield an additional 50,000 jobs. The resulting improved industry sentiment, evidenced by the May 2015 Fáilte Ireland Tourism barometer, is the driving force behind a number of refurbishment and extension projects as well as a large number of property transactions. We are already backing a number of these projects around the country and expect the demand to continue.

“The agri sector continues to perform strongly and we are experiencing year on year increases in approvals and drawdowns as farmers continue to invest in expanding their capacity. Increased levels of activity in the sector have been primarily driven by land purchase and farm development as customers respond to the growth opportunity afforded by the abolition of the milk quotas, however gearing levels are still very low and overdraft utilisation remains light. Across the sector, the milk price decrease is the main negative for farmers this year. Grain price prospects are improving in advance of the Irish harvest while beef prices are c. 16% higher than they were at this time last year. Despite the reduction in milk prices, cash flow remains strong across the agri sector with less than 25% of all overdraft permissions drawn at the end of June of this year.

“We remain focussed on supporting long-term, sustainable growth plans for businesses operating in the retail sector and we continue to see a strong pipeline of retail focussed proposals. The latest CSO Retail Sales index that issued at the end of June confirms that continued improvement in the sector with an annual increase in sales volume of 5%. 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”, concluded Mark Cunningham.


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