Mr. Tadhg Buckley:

I refer to some of Deputy Penrose's queries. I will make two points on overdrafts. The first is that approximately 12% of overall lending to the agri-sector last year was overdraft lending. Our current utilisation rate is 34%, part of the reason for which is that the overdraft is designed as a flexible facility which should come in and out of credit. While it is expensive - a point I would not contradict for a second - we do not see it as a form of medium-term finance for farmers. It should be used for current expenditure on a seasonal basis. At the risk of repeating myself, I refer to the facilities provided side by side with overdrafts, including the stocking facility, the farmer credit line, which is substantially cheaper. We encourage farmers to have the two facilities running side by side in order to ensure that they are not paying interest at 7.85% for longer than a month or three in the year. That is a lot of what we are doing to try to reduce the cost of credit to farmers, namely, encouraging them to use the farmer credit line.

We have participated in all SBCI schemes to date and will engage with the corporation again on its new investment loan scheme. Based on previous engagements, we expect to be in a position to participate in the next one. There is no refinancing from funds or other banks. Like Bank of Ireland, we welcome the opportunity to refinance loans once we are happy with repayment capacity and the interest rate.

In the context of Senator Paul Daly's comments, we have seen no restructuring as yet, but the first thing farmers will look for is liquidity for working capital. Restructuring does not necessarily provide immediate liquidity. I expect it to be later in the year before we start to see that. The Senator made a valid point, particularly as it relates to tillage and dry-stock farmers, many of whom have annual loan repayments falling in October or December. In a large number of those cases, interest-only arrangements may be a suitable tool to reduce the outgoings for the year and to give farmers some space to breathe.

I was asked about the short-term outlook. We have not seen any farmers who have not sought approval for their stocking loans again this year. While farmers may look for approval, that does not necessarily mean they will draw the funds down. I live on a dairy farm in rural Ireland. I am a dairy farmer as well as a banker. We try to listen to farmers. I meet farmers every day of the week and try to listen to their issues. I try to use that experience to help AIB respond in the best way to those issues. We are fully aware of the issues because we meet guys every day of the week. There is a great deal of stress out there, including from a psychological perspective, because there has been no downtime. When the weather cleared in April and May, the first thing guys had to do was try to catch up. We were straight into the silage season, which is a big thing, but the first cut was not made when we had a drought. It has been a very difficult 18 months, which the bank knows. That is why it is important from our perspective to ensure our front-line staff are fully aware of the pressure farmers are feeling. I will ask Ms Brennan to discuss the wider SME sector.