BoI lending to SMEs up 13%

Bank of Ireland’s lending to the SME sector increased 13% to €4.5bn last year compared with the previous year.

There was a total of 61,000 credit applications during the 12-month period with an 88% approval rate.

“Agriculture continued to be a very important growth sector for the bank, with overall approvals to the sector exceeding €620m, a 19% increase over the previous year; €135m 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,” said its director of business banking, Mark Cunningham.

“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.”

Bank of Ireland now accounts for over 50% of all lending to the SME sector, excluding property-related lending, Central Bank figures show.

Bank of Ireland was the first of the domestic banks to return to outright profitability in 2014. The Government retains a 14% stake in the bank valued at €1.4bn.

The State has already received €5.8bn from Bank of Ireland for the €4.8bn of taxpayers’ funds it pumped into the bank in 2009.

“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 seven-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.”

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