New SME lending in 2021 down 25% on pre-pandemic levels

New lending to small- and medium-sized businesses was €1.1 billion in the final quarter of 2021, the highest level achieved throughout the year, new data from the Central Bank showed.

Gross new lending was marginally higher compared with the year before, but still lagged pre-pandemic levels by 25 per cent.

Net lending was still in negative territory for the year, declining by €179 million, but had improved compared to 2020 when net lending declined by €1.5 billion.

The figures showed Irish banks increased their outstanding stock of SME credit by 0.5 per cent over the fourth quarter of 2021 to reach €18.3 billion, including €5.6 billion in property-related loans and €12.7 billion of core SME credit.

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Declines reversed

The final three months of the year saw net lending to SMEs reverse some of the declines in the previous two quarters, with repayments exceeding new lending by €179 million, just under 1 per cent over the year.

Gross new lending advanced to SMEs was €1.1 billion during the last quarter of the year. This marked the largest quarterly new lending amount since the end of 2020. Gross new lending to SMEs was €4.1 billion over the year to end-December, representing only a slight increase of €39 million when compared to 2020.

Estimated repayments

Gross new lending to core SMEs – those in non-financial, non-property related sectors – was €819 million over the quarter and €2.9 billion over the year. Net lending was €139 million in the fourth quarter.

Estimated repayments by SMEs were the lowest on record over the year at €4.2 billion.

A total of €70.3 billion in outstanding credit to all Irish resident private-sector enterprises was recorded during the period, including lending to SMEs and large enterprises. Deposits increased by €13.4 billion over the fourth quarter, the largest quarterly increase within private-sector deposits on record.