New lending to non-financial, non-real-estate SMEs up 4.8% in the year to Q1 2016

• New lending to non-financial, non-real-estate SMEs up 4.8% in the year to Q1 2016.
• The stock of SME credit continues to decline and has reduced by 5.3% since the last report.
• Rejection rates show further declines and are now in line with euro area averages.
  Interest rates on non-financial corporation loans under €250,000 remain high relative to euro area averages.

The Central Bank has published the SME Market Report 2016H1 for the first half of 2016.

The report shows that new lending to non-financial, non-real estate SMEs in the year to Q1 2016 is 4.8% higher than Q1 2015 and 38% higher than Q1 2014. The stock of credit shows further declines and is down 5.3% since the last report. The SME lending market remains highly concentrated. The combined market share of the three main banks is 95%.

The share of SMEs applying for bank credit has declined from 30% to 26% since the last report.  Rejection rates also show declines and are now in line with euro area averages.

Interest rates on non-financial corporation loans under €250,000 remain high relative to euro area averages. 26% of SME outstanding stock was in default at the end of 2015, down from 41% in 2013.

Additionally, the Report outlines initial lending flows by the Strategic Banking Corporation of Ireland and Microfinance Ireland. The Report also summarises recent Central Bank research exploring factors driving interest rate differences in the euro area.