Large share of Cork, Kerry SME loans soured
The amount of non-performing loans advanced to small firms still on the books of the three main banks has fallen sharply, but there are large regional differences, according to Central Bank research.
The level of non-performing loans had fallen to just over 11% at the end of 2018, which was down sharply from 17.5% in mid-2018 and is likely to have fallen further in the first part of this year, said researcher Niall McGeever, as banks applied so-called loan cures.
However, he said a big portion of the non-performing loans that were categorised as non-performing under regulator definitions were not in arrears, while many loans have been in arrears for over two years.
First, there is a large spread in non-performing loans ratios across counties. Second, counties in geographic proximity to one another can have substantial differences in non-performing loans ratios.
"Third, almost all counties have a non-performing loans ratio of 8% or higher. Fourth, borrowers in the west have relatively high non-performing loans ratios,” he said in A Profile of Non-performing Irish SME Loans.
“A relatively high proportion of balances in the south-west and west are non-performing, but not in arrears. It is important to understand that these ratios do a good job of describing the contents of bank-loan portfolios, but are a poor guide to local economic conditions,” said Mr McGeever.
He said research showed “current non-performing loans ratios are only loosely related to developments in economic conditions in particular regions or sectors”.
