Bernard Durkan (Kildare North, Fine Gael)
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278. To ask the Minister for Finance the extent to which his department monitors credit needs throughout all aspects of the business sector without exception; if he has satisfied himself that this need is being met fully in line with economic requirements; and if he will make a statement on the matter. [10440/17]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, small and medium sized businesses play a central role in the sustainable recovery of the Irish economy. Government policy is focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.

The Deputy will also be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to products as determined by the banks.

All viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy. As the Deputy may be aware, section 3.5 (Ensuring Finance for Growth) of the Action Plan for Jobs 2017 (APJ) sets out a range of commitments to ensure viable SME's can access appropriate finance at a reasonable cost from both bank and non-bank sources.

In line with Action 62 of the APJ 2017, officials from my Department will collate and examine data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.

In terms of monitoring the requirements for SMEs, my Department commissions biannual surveys to ascertain the demand for credit by SMEs. This survey series, most recently conducted by Behaviour and Attitudes on behalf of my Department, is the most comprehensive survey of SME credit demand in Ireland, covering 1,500 respondents and involving over 6,000 direct telephone calls to SMEs. SMEs of all sizes trading in all sectors, excluding property development and speculative activities, are included. The survey covers demand for credit from both bank and non-bank sources.

I would draw the Deputy's attention to the most recently published Department of Finance SME Credit Demand Survey covering the April to September 2016, which can be found at .

The results of this survey show that, when pending applications are excluded, 84% of credit applications to banks were approved or partially approved. Demand for credit remains subdued and the latest survey shows only 23% of requested bank finance in the previous six months down from 26% in March 2016.

Purchases, replacement or lease of new vehicle/equipment is now provided as the main reason for applying for bank finance with 29% stating this is why they requested bank finance. Working capital/cash flow requirements were provided as the second highest reason for applying for bank finance with 27% of respondents stating that they required finance for this purpose. When asked about sources of finance for working capital, internal funds/retained earnings were the main finance source of working capital with 73% of working capital coming from this source (up 6%). The survey also showed continued positive trends in terms of trading performance, profitability and employment.

The Government remains committed to the SME sector, as reflected in the Programme for a Partnership Government, and sees it as a key engine of ongoing economic growth. Consequently, my Department and the Credit Review Office, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit on both a macro and sectoral basis in order to ensure that sufficient access to finance is available to facilitate participants in the SME sector to reach their full potential in terms of growth and employment generation.