The following graph sets out the sectoral analysis of approvals over the period under review (by number):
Approximately 72% of approvals were concentrated in three sectors; the Agriculture, Hunting and Forestry sector (40%); the Real Estate, Renting and Business Activities sector (19%); and the Wholesale/ Retail Trade and Repair sector, (13%)
In the prior period these three sectors accounted for 67% of applications.
The graph below shows the same analysis by value of applications:
The following table sets out the total approval rate (on a combined product basis) for each sector over both the prior review period and the current review period:
- 5,000 10,000 15,000 20,000 25,000 30,000 Agriculture, Hunting & Forestry
Fishing Mining & Quarrying Manufacturing Electricity, Gas & Water Supply Construction Wholesale/Retail Trade & Repair Hotels & Restaurants Transport, Storage & Communications Financial Intermediation Real Estate, Renting & Business Activities Health & Social Work Other Community, Social & Personal Services
Number of Applications
Graph 28: Approval of Formal Applications by Sector (Number)
€0m €250m €500m €750m €1,000m €1,250m Agriculture, Hunting & Forestry
Fishing Mining & Quarrying Manufacturing Electricity, Gas & Water Supply Construction Wholesale/Retail Trade & Repair Hotels & Restaurants Transport, Storage & Communications Financial Intermediation Real Estate, Renting & Business Activities Health & Social Work Other Community, Social & Personal Services
Value of Applications Graph 29: Approval of Formal Applications by Sector (Value)
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Table 5: Approval Rate By Sector
Sector June 08 to Feb 09 Mar 09 to Sept 09
Agriculture, Hunting & Forestry 90.1% 90.0%
Fishing 91.3% 90.6%
Mining & Quarrying 88.3% 84.1%
Manufacturing 88.2% 84.9%
Electricity, Gas & Water Supply 89.1% 82.0%
Construction 89.7% 86.3%
Wholesale/ Retail Trade & Repair sector 87.5% 85.5%
Hotels & Restaurants 86.8% 85.5%
Transport, Storage & Communications 85.2% 82.3%
Financial Intermediation 90.7% 84.2%
Real Estate, Renting & Business
Activities 80.6% 79.5%
Health & Social Work 91.5% 87.8%
Other Community, Social & Personal
Services 95.5% 92.8%
Sector split not possible 15 77.9% -
All Sectors 86.1% 86.4%
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In the prior period a portion of applications (14.4%) could not be analysed by sector, and as such was grouped as one sectoral category. This issue has been addressed in the current report and it is apparent that all individual sectoral application levels have increased to reflect this reallocation. As such whilst the approval rate has increased on an overall basis from 86.1% to 86.4% as compared to the previous period, individual approval rates have decreased. As such the sectoral approval rates for March to September 2009 should be considered as representative of the actual position.
It should be noted in reviewing the above table that the volume of credit applications in some sectors is relatively small and as such a small number of applications either approved or declined may have a disproportionate impact on the overall approval rate for that sector.
The spread of approval rates by sector in the current review period ranges from 92.8% (for the Other Community, Social and Personal Services sector) to 79.5% (for the Real Estate, Renting and Business Activities sector).
The demand survey suggests a rate of approval of 72% across all banks lending to SMEs whereas the bank data would suggest an approval rate of 86% (as set out above), representing a difference of some 14 percentage points between the two. This would primarily appear to arise as a result of a difference in perception as to what constitutes an application for credit and when and how credit applications are recorded on participating banks’ systems.
The banks formally measure applications for credit only when they enter into the bank’s credit systems and processes whereas in general it would appear that customers recognise applications from credit enquiry stage. Formal applications are sometimes completed internally within the bank as distinct from by the customer. In addition, credit applications are, in some cases only recorded on bank credit systems when a formal decision has been reached by the bank.
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It is more meaningful however to review approvals in terms of the approval rates per month for each product.
The graph below sets out the approval rates for loans & overdrafts and finance & leasing for both the prior and current review periods.
The approval rate for each lending product category is as follows:
• 87% of formal applications for new loan and overdraft credit were approved over the period (the monthly approval rate ranges from 86% to 89% over the period). In the prior period the approval rate for loans and overdrafts was 86%. It is not possible to separately analyse loans and overdrafts
• The corresponding approval rate for Finance & Leasing was 82% (the monthly approval rate ranges from 81% to 83% over the period). In the prior period the approval rate for Finance & Leasing was 85%.
70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0%
Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09
Pe rc en ta ge o f A pp lica tio ns
Graph 30: Approval Rates for Formal Applications by Product
Loans & overdrafts Finance & Leasing
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• The Invoice Discounting approval rate fluctuates significantly over the period. It should be noted that there were only 230 applications over the 7 month period for Invoice Discounting and as such it was not deemed material for inclusion in the above graph. Further analysis of the invoice discounting approval rate is deemed immaterial.
• The blended approval rate for loans & overdrafts and finance & leasing is 86.4% (prior period 86.1%); see below for an analysis of this by sector.
• From April 2009 onwards, there was a noticeable upward trend in the approval rate for loans and overdrafts
3.4 Credit Declines
Our analysis of declines includes all formal applications made in the review period which were not approved.
Any analysis of the rate of declined formal applications is limited. This is also due to the nature in which information is recorded on participating bank systems (as set out earlier, enquiries are not recorded and formal applications are in some cases only logged after an initial assessment has been completed by lending or branch managers).
The rates of decline, in number, product and sector are the inverse of the approval rates set out above. The graph below sets out the trend in the total number of declines in each month:
- 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000
Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09
N um be r o f A pp lic at io ns
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