LENDING TO SMALL businesses by Bank of Ireland has increased by 7% to €2.1 billion so far this year, driven largely by a pickup in the commercial vehicle market.

Loans for new light and heavy commercial vehicles are up by 37% and 42% respectively, which the bank said could herald an improvement in the wider economy in the short to medium term.

In a statement accompanying the figures, Bank of Ireland said: “The strong performance in the year to date in the motor market, whilst coming from a low base, tends to be a lead indicator and reflects the re-emergence of consumer and business confidence.”

The pillar bank is also tracking an improvement in lending to property companies over the last six months.

Bank of Ireland pointed out that the gross figure for SME loans is for new and increased lending, rather than restructuring.

Head of business banking growth Michael Lauhoff said: “We are seeing some very encouraging signs of increased demand from our business customers. Whilst some of this activity can be attributed to some competitors leaving the market, we are also seeing some positive signs of renewed investment in key sectors of the economy.”

The bank said that it is providing “in excess of 50% of the new non-property lending to SMEs and the agri sector”, based on an analysis of Central Bank figures.

The agri sector has been particularly fruitful for BoI, with many farmers reacting to the dropping of milk quotas by buying up land and investing in milking parlour upgrades.

“We would anticipate that the re-emergence of consumer and business confidence bodes well for an increase in the level of investment activity for the remainder of the year.”

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