Credit Review Market Commentary welcomed by Minister McGrath

The latest Credit Review Market Commentary report observes that credit demand for new money across Ireland remains muted.

The expectation however is that as the economy gets back on its feet bank lending should grow, but growth could be hindered by increasing interest rates and increased economic uncertainty.

Specific issues highlighted include:

• The exit of Ulster Bank and KBC – SME’s seeking finance have fewer options and access to credit for businesses with historic credit challenges is increasingly limited
• Unwinding of Covid related creditor legacy issues, including tax warehousing, may lead to cashflow pressures and debt restructuring requests.
• SMEs currently have a preference for using internal funding for investment, which can tie up working capital and reduce resilience to further shocks.
• Irish banks are tasked with a reduction of Non-Performing Loans/Exposures ratio to 3% by end 2023 which will require further SME debt restructuring or portfolio loan sales.

For these reasons Credit Review expects an increased level of appeals in relation to debt restructuring and refinance requests in the short term, while the level of appeals for new money requests will remain subdued.

As noted on the Dept of Finance press release.