Report shows SME loans aren’t always risky

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10th August 2015 12:54 - Business Support

A recent report – published by Interim Partners – has revealed that small business lending is not always risky, with a new survey discovering Report shows SME loans aren’t always riskythat SME lending in the United Kingdom in expected to give banks their highest margin growth out of any other loan product, this year.

The survey of interim executives within the banking industry has revealed that more than 1 in 3 anticipates SME loans to experience the fastest growing margins over the next 12 months.

Of the respondents, 35 per cent cited SME loans as the most likely to see the highest margin growth, significantly more than other kinds of loans. As well as this, only 19 per cent said that unsecured personal lending would see the highest growth rate and just 8 per cent cited lending to large businesses.

Angela Hickmore of Interim Partners said of the findings: “Clearly banking executives expect that margins within SME lending will be best protected. We are certainly seeing more interest in this area from new challenger banks that are freer than the bigger banks to cherry-pick the more attractive parts of the market.”

Hickmore added that if interest rates increase, lending margins may rise even further, whilst researchers also discovered that an increase in SME loan demand may also boost figures.

The researchers also identified that interim executives believe that lending is now the most important method to increase the United Kingdom’s economy. More than 50 per cent agreed, claiming that lending is more important than for banks to be generating more revenue or investing more in compliance measures.

“Banks have worked hard to rebuild their balance sheets,” Hickmore added.“But senior executives in this market feel it is now time for a shift in emphasis to loosen the purse strings a bit more and provide the increased finance to sustain the recovery.”

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