SMEs are asking for more loans, Bank of Ireland has said, boosting hopes that some of the worst effects of Brexit are beginning to lift.
Small firms have been in the firing line since the UK voted in the summer of 2016 to leave the EU and surveys have suggested that the amount of lending advanced to SMEs fell late last year.
In a trading update, Bank of Ireland said its corporate and retail lending had helped boost loan volumes to €79.1bn, up €2.1bn since the start of the year.
“For our SME customers, we have seen increasing activity, confidence and credit demand” and “positive momentum” has continued, the bank said.“Economic growth in our core markets of Ireland and the UK remained positive notwithstanding ongoing uncertainties related to the UK’s decision to leave the European Union,” it said.
Philip O’Sullivan, chief economist at Investec Ireland, said part of the large increase in customer loans volumes came after sterling had risen against the euro in recent months.
The primary driver of underlying loan growth was another standout performance from the corporate business (€500m), with Retail UK also chipping in.
Mr O’Sullivan said the bank’s 23% share of new mortgage lending in the first three months was nonetheless “slightly sluggish”.
But broker Davy said Bank of Ireland was unlikely to cut its mortgage interest rates to boost market share on signs that activity had recently picked up.
The lender provided no new details about its plans to reduce its non-performing loans. It has in the past said it would not rule out further loan sales or so-called market securitisation transactions to cut its non-performing exposures.