BANK LENDING to small businesses continued to fall in the second quarter of the year, new figures from the Central Bank have confirmed.
Lending to small firms outside the property and financial sectors declined by 3.3 per cent, or €891 million, over the second quarter, bringing the decline over the year to the end of June to 9.9 per cent.
The rate of decline has been increasing. The decline to the end of June compared with an annual fall of 8.3 per cent for the year to the end of March.
The largest declines during the second quarter were in lending to small businesses in manufacturing and in the business and administrative services sectors.
Loans advanced to companies not involved in the financial or property sectors during the second quarter fell by 2.2 per cent or €841 million, bringing the annual decline over the year to the end of June to 7.5 per cent.
This brought the outstanding amount of loans to these companies to €40.4 billion at the end of the second quarter of the year.
Lending to hotels and restaurants and the wholesale and retail trade fell the most over the year to the end of June.
Deposits held by private companies at credit institutions fell by 17 per cent or by €15 billion to €81 billion over the course of the year.
There was a €2.4 billion or 3.2 per cent fall in deposits in the second quarter on top of a €3.6 billion or 4.5 per cent decline in the first quarter of the year.
Companies in financial intermediation accounted for most of the decline in deposits, falling by €9.4 billion or 20 per cent over the year to the end of the second quarter.
Excluding this sector, deposits held by private companies fell by 13.4 per cent or €5.6 billion over the year.
Loans to building and property businesses increased by €424 million during the second quarter of the year but it was still down 2.2 per cent over the 12-month period.
The Government-appointed Credit Review Office, which assesses loan refusals to small businesses, has echoed comments by the banks that demand for credit among businesses remains muted.
However, small business pressure groups such as Isme and the SFA have argued that the banks have pulled back on their lending.
