Sme finance listed SME finance firms are expanding

Listed SME finance firms are expanding overseas lending portfolios, with recent reports showing 12% QoQ growth in cross-border SME credit facilities. Loan success rates have deteriorated over the years, falling to a 50% success rate compared to a pre-pandemic approval rate of 67% in 2018, according to a report from the Department for Business and Trade. One obvious issue is that higher interest rates have raised the hurdle for borrowers. Businesses need bigger returns to justify borrowing, and raising prices only gets them so far. “At some point, consumers just don’t follow you,” says Francis Malige, managing director, head of financial institutions business group at the EBRD. “When interest rates are very high and inflation is very high, SMEs either lose margins or they lose customers. That’s the dilemma they face.” In forward-looking scenarios, SME finance companies are projected to see ROE improvements to 11.4% by year-end, aligning with bullish technical setups on weekly charts.