The Bank of Ireland said business lending could return to pre-Covid levels by the end of the year.
n an interview with the Independent SundayBank of Ireland’s new director of corporate banking services, John O’Beirne, said he had seen a “strong recovery”. He said loans reached € 1.4 billion in June this year, up 16% from 2020, with the current trajectory suggesting they could reach 2019 levels by the end of this year. the year with the reopening of various sectors.
When asked if he was confident SME and business lending would stabilize and recover, O’Beirne said a stabilization has already occurred.
“I think by the end of this year we will be back to 2019 levels for SME type loans,” he said. “It’s definitely driven by things like the automotive industry, a lot of good stuff in farming and the food and drink space.
“If you look at corporate sentiment, it has rebounded strongly over the summer.”
O’Beirne said that while the Bank of Ireland had seen demand for SME loans start to pick up, activity was still muted.
“There is such a long tail behind things like the 2008 credit crunch that not everyone is confident. They want to be careful about what they are going into debt and what they are able to manage and serve. “
“We had taken a lot of supplies in the middle and at the end of last year when you were in the midst of a pandemic.
“But think about these payment breaks. Nine out of 10 business customers are back on the same terms as before they entered the pandemic. Of those in 10 who are not, there has been a bit of restructuring on the loan but not a case where they have encountered huge difficulties.
Looking at the outlook for various industries, O’Beirne warned that some businesses in the hospitality industry may not recover until 2025.
“When you look at things like the hospitality industry, you’re looking to see how comfortable the business really is,” he said. “Everyone who has survived to this point has already done a hell of a good job, and the question is whether they will be caught.”
Beirne also warned that tax debt storage could become a “big deal” in the future.
“It’s going to continue, but if you watch next year, what happens then?” He said. “They either have the cash on the balance sheet to be able to pay it off, or it will effectively give them another bill to pay monthly based on the interest rate set there.”
Looking ahead, O’Beirne said new digital innovations will come from the Bank of Ireland. For example, he said there might be work around the loan application process and how the bank could digitize it and bring it to “instant credit decisions”.
O’Beirne said he believes if SMEs become more confident about investing in their future, the Bank of Ireland’s business banking division will experience strong growth. “This is the main thing for us internally, make sure that we are a credible and swift partner who can work with companies for the markets of the future. “