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The Central Bank of Ireland today published
research entitled 'The Irish SME Lending Market ¡V A Snapshot, December
2010, which shows that 70% of loans to Irish SMEs (small and medium sized
businesses) were performing at the end of 2010. The Central Bank says that 18%
were on a watch-list or were past due, while 12% were impaired.
The research provides a detailed overview of the
shares and performance of loans across sectors of activity and loan size
brackets. The work will be presented publicly at the Central Bank conference
'The Irish SME Lending Market: Descriptions, Analysis, Prescriptions' on March
The data used in the analysis come from a large
sample of SME loans collected for the March 2011 Financial Measures Programme
Report and used in stress testing the Irish banking system. The loan data can be
divided into three categories of performance: Performing; Watchlist or Past Due;
Default or Impaired.
The key findings of the research are as
At end-2010, the largest sectors in terms of
the Irish financial institutions¡¦ SME exposure were Wholesale & Retail
(20%), Financial (16%), Hotels & Restaurants (15%) and Agriculture (15%);
Of these large sectors, loans to the Hotels
& Restaurants and Financial sectors were of much larger value on average;
In total, 70% of SME loans were performing
at end-2010, with 18% categorised as Watchlist or Past Due and 12% Impaired;
The sector with the largest share of
performing loans was Agriculture at 81%;
Of the large-exposure sectors, Hotels &
Restaurants had the lowest share of performing loans at 49%. Other sectors
with low share included Construction (65%), Financial (65%), Manufacturing
(66%), Professional & Real Estate (69%) and Wholesale & Retail (69%);
In analysing the share of performing loans
across the distribution of loan value, it was found that the lowest shares
of performing loans were among the largest loans, with a share of performing
loans below 50% in the top 10% of loans;
Among the smallest 75% of loans by value,
the share of performing loans hovers between 70 and 85%, with the share
falling as loans get larger thereafter;
By sector, it is shown that most sectors
follow the above pattern whereby amongst the largest value loans, the share
of performing loans falls below 60 and even 50%;
Two sectors stand out in this regard: in the
Hotels & Restaurants sector, the share of performing loans in the top 20% of
loans by value is below 30%; in the construction sector the figure is
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