The Central Bank of Ireland (CBI) yesterday released its first breakdown of corporate lending in the fourth quarter 2016.
The figures show that total lending to private non-financial corporations (PNFCs) contracted by 4.5% on the year. However, excluding property-related sectors, lending actually expanded by 1.2% to €28bn.
It appears that after a long period of deleveraging lending is finally starting to pick up — reflecting Ireland’s economic recovery. Excluding property, Irish bank lending to corporates peaked at €60bn in 2008 but has now more than halved to €28bn.
The statistics show large variation across sectors. Lending to primary industries is up 3.8% to €3.9bn and to manufacturing firms is up 9.2% to €3.2bn. Business and administrative services saw 14.5% growth to €2.5bn.
In contrast, construction-related lending fell by 18.5% on the year to €755m. Real estate, land and development activity companies saw their lending contract rapidly through 2016, down 12.2% to €15.5bn.
Davy Stockbrokers have today indicated that it is also large companies that are driving credit demand. The CBI’s release shows that credit to large enterprises (excluding property) expanded by 15.8% in 2016 after a 12.7% rise in 2015.
In contrast, lending to SMEs contracted by 9.0% in 2016, sharper than the 8.1% fall in 2015. Total lending to SMEs fell by 11.7% through 2016 and now stands at €28.0bn, down from €33bn one year ago.
Despite this, gross new lending to SMEs equalled €1.0bn in Q4 2016. This is the strongest quarter for new SME lending since the recovery began and is far higher than the €730m average seen through the first three quarters of 2016.
Source: www.businessworld.ie
