Ireland sees growth in SME borrowing

Irish SMEs drew down €1.4 billion in loans from Irish banks over Q2 2019, an increase of €147 million on the same period of 2018. SMEs in the property sector accounted for the largest share of new drawdowns at 36 per cent, followed by SMEs in the wholesale/retail trade and agricultural sectors; accounting for 12 per cent each according to new statistics from the Central Bank of Ireland.

The figures also showed that:
· The outstanding stock of Irish SME credit on the balance sheets of Irish banks increased by 0.9 per cent over Q2 2019 to stand at €22.6 billion. This included €7.9 billion relating to property and €14.5 billion of core SME credit.[1]
· Gross new lending to SMEs was €1.4 billion during Q2 2019. Property-related lending accounted for 36 per cent over the quarter, recording a series high of €522 million. In the four quarters to end-Q2 2019, gross new SME lending was €5.3 billion; representing a decrease of €66 million when compared to the previous four quarters to end-Q2 2018 (Chart 2).[2]
· Borrowing outpaced repayments in Q2, with net lending to Irish SMEs at €195 million; indicating the largest quarterly increase since 2011. Conversely, in annual terms, SME lending declined by €806 million (Chart 1).
· Repayments by SMEs remained elevated over the quarter, at €1.2 billion; albeit Q2 2019 repayments were lower than previous quarters.[3] Property-Related SMEs accounted for a third of repayments in Q2 2019, with €425 million repaid in property-related debt.
· Gross new lending to core SMEs was €914 million over the quarter, representing an increase of €102 million compared to Q1. Over the past twelve months, new lending to core SMEs totalled €3.6 billion, with SMEs engaged in the wholesale/retail trade, and agricultural sectors accounting for the majority of new drawdowns in both quarterly and annual terms.
· Net lending to core SMEs was €105 million in Q2 2019, reversing the decrease in Q1. New drawdowns exceeded repayments in eight sectors during the quarter.
· The total outstanding amount of credit to all Irish resident private-sector enterprises was €80.8 billion at end-June 2019, marking the lowest level of outstanding credit since the series began.
· Credit advanced to core private-sector enterprises increased by €1.9 billion or 6.9 per cent on an annual basis, representing the largest annual increase since early 2009.
· Net Lending to large core enterprises was €2.2 billion over the year, representing the largest annual increase since the series began (Chart 5).

SMEs are defined as enterprises with fewer than 250 employees and whose annual turnover does not exceed €50 million and/or whose annual balance sheet does not exceed €43 million.