SME lending declines for 23rd consecutive quarter
The watchdog said credit to SMEs — considered to be 250 employees or less — declined by 0.8% over the quarter to €27.5bn in its latest report examining lending in the second quarter.
The weighted average interest rate on new non- financial SME loan drawdowns was 4.05% in the second quarter, which was a fall of five basis points over the year, the Central Bank report said.
It said in its second quarter report that property-related lending to SMEs currently represents 41% of Irish banks’ outstanding SME loan book.
“There remain significant differences in interest rates charged to property-related lending, with lower rates agreed on new SME lending for real estate, and higher rates for construction lending,” the report said.
Property-related SME loans declined by €223m in the quarter, as repayments continue to outstrip new drawdowns, the Central Bank said.
The last time there was an increase in lending to SMEs was in the third quarter of 2011.
Some €812m more was repaid than drawn down in the second quarter, the report said.
“Credit to core SMEs remains consistently subdued, in contrast to large enterprises which have seen many quarters of growth in recent years,” the report said.
Large business lending that was not financial or property-related increased on both a quarterly and an annual basis.
The 12.7% annual increase marked the 11th consecutive period of positive annual growth, while the quarter-on-quarter increase was 3%.
