Lending to small- and medium-sized enterprises (SMEs) over the year to the end of March was down 23.6 per cent compared with the year before in what was the largest annual decline since records began, new figures from the Central Bank show.
Irish banks advanced €4.1 billion of gross new lending to SMEs, representing a decrease of €1.3 billion.
The outstanding stock of SME credit on the balance sheets of Irish banks increased by 1 per cent over the first quarter of 2021 to stand at €19.9 billion. This included €7 billion relating to property and €12.8 billion of core SME credit.
Net lending to SMEs was €202 million, which was the largest quarterly increase since the end of 2019. Annually, repayments exceeded new lending by €423 million over the year to the end of March.
Gross new lending advanced to SMEs was €1 billion during the quarter. This represented only a slight decrease of €54 million when compared with the same period in 2020.
Estimated repayments by all SMEs were lower than previous quarters at €843 million.
Annually, repayments by all SMEs were €4.5 billion. This was the lowest annual repayment level seen since records began. Payment breaks agreed on many loans have contributed to this decline.
Gross new lending to core SMEs was €740 million over the quarter. Core SMEs are in non-financial, non-property related sectors. Annually, new lending to core SMEs totalled €2.9 billion, representing the lowest amount of loans forwarded over a four quarter period since early 2016.
This reflected a year-on-year decline of €714 million or 19.9 per cent, which was again the largest year-on-year decline within core SMEs since records began.
The weighted average interest rates on outstanding SME loans increased very slightly in the quarter, rising by one basis point to 3.46 per cent. However, there was a decline of 14 basis points over the year.
The interest rate on new SME loan drawdowns decreased by 7 basis points over the first quarter, and now stands at 3.71 per cent. SME interest rates varied between sectors. Higher than average rates were charged to the primary industries and transportation and storage sectors.
The total outstanding amount of credit to all Irish resident private-sector enterprises stood at €66.2 billion. This includes lending to SMEs and large enterprises, which decreased by €2.3 billion in net terms over the quarter.
Credit advanced to core private-sector enterprises decreased by €104 million over the quarter. Annually, core credit decreased by €2.3 billion or 8.2 per cent. Credit to all core enterprises amounted to €25.3 billion at the end of the quarter.
Net lending to large core enterprises decreased by €288 million. Annually, net lending to core enterprises decreased by €2.1 billion, marking the largest annual decline within large core enterprises since records began.
Deposits from all Irish private-sector enterprises increased by €18.7 billion over the year. The annual increase was driven by broad-based sectoral growth.
The financial intermediation sector, however, was responsible for the largest single share in the growth, with €5.8 billion of deposit inflows.