Nonbank lenders have established a strong presence in the Irish market, with €20 billion in credit extended to households and small businesses at the end of 2023, a new report has revealed.
This amounted to about 15 per cent of all outstanding credit to these sectors at the time.
The research by Banking and Payments Federation Ireland (BPFI), based on data from the Central Bank, said the sector here, which include players such as ICS Mortgages and Finance Ireland, encompasses “a large and diverse group of financial enterprises”.
Approximately half of the €20 billion was made up of residential mortgages to homeowners (€8.1 billion) and landlords (€2.2 billion).
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The report also indicates that about one-third of the value of new lending to SMEs (small and medium-sized enterprises) (€4.5 billion) came from nonbank lenders. These lenders typically source their funding in the wholesale and bond markets and were more impacted therefore when interest rates spiked in 2023.
The BPFI’s report indicated that non-banks and specialist banks accounted for 72 per cent of the outstanding value of personal asset finance, including car finance, valued at €3.5 billion.
BPFI chief executive Brian Hayes highlighted the increasing presence of nonbank lenders in the Irish market, suggesting they were “a vital segment of the financing ecosystem, driving greater choice and competition for consumers and SMEs”.
“This is clearly demonstrated by the fact that credit from these lenders accounted for about 15 per cent of all outstanding household and SME credit at the end of 2023,” he said.
“Looking at the mortgage market, nonbank lenders are actively increasing their mortgage activity, managing almost 45,000 homeowner mortgages by the end of September 2024, an increase of 25 per cent year on year,” Mr Hayes said.
“In addition to mortgage lending, they provide a wide range of consumer credit solutions such as credit cards, personal loans and asset finance,” he said.
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