Lending to SMEs falls further

Banks are continuing to tighten the flow of credit to Small and Medium-sized Enterprises (SMEs), new figures from the Central Bank showed today.

Lending to SMEs declined again in the second quarter of 2012, according to the Central Bank data.

Lending to non-financial, non-property related SMEs by Irish resident credit institutions declined by €390 million or 1.4 per cent over the second quarter, and €1.2 billion or 4.6 per cent over the year to the to the end of June. This follows an annual decline of 6.3 per cent in the year to the end of March 2012.

The amount of credit advanced to non-financial, non-property related enterprises declined by €530 million or 1.3 per cent in the three months to June, whil credit advanced to the construction and real estate sectors fell by 1.9 per cent in the year ending June 2012.

Lending to SMEs increased in three non-financial, non-property related sectors during the second quarter: manufacturing (€18 million); water supply, sewerage, waste management and remediation (€11 million); and the education sectors (€3 million).

New lending, which excludes lending related to restructuring or renegotiation of existing facilities, came to €459 million during the second quarter.

In total, Irish financial institutions had €213.6 billion in outstanding loans to Irish private-sector enterprises as of the end of June, with more than half of this accounted for by the financial intermediation sector. This was down by 3 per cent, or €3 billion, on the previous year.