Deposits by Irish firms rise as SME loans still cost double eurozone rate

New figures from the Central Bank show deposits from SMEs rose by €6.2bn during the third quarter this year. Picture: Leah Farrell/Rollingnews.ie

Deposits from Irish firms have climbed by €20.6bn so far this year, the largest ever annual rise, but Irish SMEs continue to pay over twice the rate for their new loans than anywhere else in the eurozone. 

New figures from the Central Bank show deposits from SMEs rose by €6.2bn during the third quarter this year.

However, the cost of new loans of over €250,000 and up to €1m cost SMEs an average of 3.29% in October, which compares with a eurozone average rate of 1.52%. 

Deposits from firms in so-called core sectors of the economy, which include non-financial, non-property related areas, increased by €3.9bn over the quarter.

The Central Bank said the quarterly increase was in part driven by the €1.3bn growth in deposits by the companies in the information and communication sector.

However, the latest figures show loans to firms decreased significantly last quarter, posting a net decline of €1.4bn. That's the largest quarterly fall since 2011.

Annually, core credit decreased by €2.3bn, or by 7.9%, representing the largest annual decrease since quarter three of 2012.

Net lending to large core companies fell on a quarterly and an annual basis, by €1.1bn and €1.7bn. 

Central Bank figures also show Ireland continues to have the second-highest mortgage interest rates in the eurozone. 

The average interest rate on new mortgages agreed in Ireland stood at 2.79% in October, more than double the average rate of 1.33% in the eurozone.

Only Greece charged higher interest rates than Ireland in October at almost 2.9%, while Finland charged the lowest, at 0.69%. 

The weighted average interest rates on outstanding SME loans decreased over the quarter, declining by 0.13% to 3.49%, while there was a decline of 0.04% over the year.