Bank of Ireland approves €4.5 billion in new credit excluding restructures to SMEs in 2014

No 1 business bank with >50% market share of new SME/Agri lending
Bank of Ireland approved €1.3bn in new credit in Q4, 2014
13% increase in new credit approval in 2014
Agri, motor and retail sectors showing strong signs of growth

Monday 26 January 2015: Bank of Ireland Business Banking has announced new credit approvals to SMEs to the end of December 2014 of €4.5 billion, up c. 13% on the same period last year. The €4.5 billion figure includes new and increased lending and does not include restructures.

The Bank received a total of almost 61,000 credit applications, up c. 8% year on year. 15,428 applications were received in the final quarter. In addition, the rate of approvals continues to rise with approximately 88% 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 continued to see signs of improved optimism in the external environment and, in particular, increased demand for credit as the agri, motor and retail sectors show continued growth.

Commenting Mark Cunningham, Director of Business Banking, Bank of Ireland said: “We continued to see increased demand for credit in the latter quarter of the year. Agriculture continued to be a very important growth sector for the Bank, with overall approvals to the sector exceeding €620 million, a 19% increase over the previous year. €135 million was approved for land purchase and we approved funding for over 24,000 acres of land. The demand for agri overdraft permissions also increased and we continued to grow our customer base.

“Agri overdraft balances decreased by 9% compared to 2013 indicating strong on-farm cash flow during the year. However given the reductions in commodity prices during late 2014, in particular in the dairy sector, some of the overdraft reserves are likely to be called on during 2015. Reduced milk prices this year will likely see greater reliance on bank funding for farm development as cash flow surpluses reduce from 2013 and 2014 levels.

“The Irish motor market continued its recovery in 2014 with the passenger car market ending up 30% with over 96,000 vehicles sold and the light commercial market registering 16,652 vehicles, up 50% on the previous year. Bank of Ireland Finance enjoyed new business volume growth of 38% across its franchise partners who account for more than 50% of the market. The growth trajectory is set to continue, with the new car market expected to grow to 115,000 vehicles. We have experienced a very strong start to the year with our franchise partners.

“The pick-up in the general economy has been evident in employment gains, increased business investment, recovery in the construction sector and improving tax revenues. Activity in the retail sector also gained momentum last year with the latest data showing that sales improved by close to 5% in the year to November.

“The outlook for 2015 is positive. Consumer confidence levels at the end of 2014 were close to 7-year highs and employment gains are set to continue, supporting a further rise in consumer spending. While the economy demonstrated significant growth in 2014 business owners are still cautious as the memories of the downturn still linger and this is particularly evident in the low utilisation of working capital facilities. It is hoped that as the market continues to improve business owners will look at expansion and we will see a greater level of pick-ups in capital expenditure, merger and acquisition activity and business property purchases”, concluded Mark Cunningham

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