Dáil Éireann Debate, Wednesday - 20 June 2012
53 Deputy Michael McGrath asked the Minister for Finance if in view of the 20% decline in the stock of lending to indigenous small and medium enterprises since the first quarter of 2010 that, in addition to a target for the pillar banks for gross new lending to SME he will apply a target with respect to the overall stock of lending to SMEs; and if he will make a statement on the matter. [30043/12]
Amharc ar fhreagraThe Central Bank publishes quarterly figures on credit advanced by Irish resident credit institutions to Irish resident SMEs. The figures are available to download athttp://www.centralbank.ie/polstats/stats/cmab/Pages/ BusinessCredit.aspx and the latest table is also attached.
In relation to the total outstanding stock of loans to SMEs, there are three figures for consideration, as shown in table A.14.1 — total outstanding loans to all SMEs, total outstanding loans to SMEs excluding those engaged in financial intermediation, and total outstanding loans to SMEs excluding those engaged either in financial intermediation or property-related sectors. Based on the change in the outstanding stock of loans to SMEs between end-Q1 2010 and end-Q1 2012, as reported to the Central Bank by all resident credit institutions, the change in lending to SMEs has been as follows:
|
Table |
|
|
Total outstanding loans to SMEs: |
6% |
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Total outstanding loans to SMEs excl. Financial Intermediation: |
7% |
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Total outstanding loans to SMEs excl. Financial Intermediation and Property Related Sectors: |
-20% |
I am informed by the Central Bank that it is important to note that the change in the stock of loans reported on the credit institutions' aggregate balance sheet can sometimes reflect non-transaction related effects, for example changes in the reporting population, valuation changes due to fluctuations in exchange rate effects, or other reclassifications. As a result, the Central Bank publishes quarterly transactions or "flows" figures, which provide details on the true underlying flow of business during the quarter. These figures adjust the change in stocks in order to strip out the impact of any such non-transaction effects. Based on these underlying flows, the developments in the outstanding stock of loans to SMEs between end-Q1 2010 and end-Q1 2012 are as follows:
|
Table |
|
|
Total outstanding loans to SMEs: |
-12% |
|
Total outstanding loans to SMEs excl. Financial Intermediation: |
-16% |
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Total outstanding loans to SMEs excl. Financial Intermediation and Property Related Sectors: |
-15% |
It is also important to note that SMEs are paying down existing debts at a faster rate than they are demanding new lending. The November 2011 Mazars survey on credit demand published by my Department showed that only 36% of companies surveyed requested bank credit in the period April-September 2011. This reflects the level of finance required by the companies surveyed, for trading at current levels, together with a reluctance to borrow for investment in new capital projects until foreseeable returns are more positive. It is for the above reasons that the lending targets applied to the pillar banks was viewed as being a more appropriate policy instrument than applying a target with respect to the overall stock of lending to SMEs.
