Bank of Ireland says it has approved €2.1 billion worth of loans to SMEs in the first half of this year, an increase of 7 per cent on the same period last year.

The bank said it approved more than 85 per cent of credit applications from SMEs in the year to June end .

The bank said it has seen a steady increase in both applications and approvals from the agri sector, which has been “performing strongly” as it prepares for the abolition of milk quotas in April of next year.

Michael Lauhoff, head of business banking growth at Bank of Ireland, said land acquisition, milking parlour investment and increased stocking requirements were the main drivers of growth from the agri sector.

The bank said new business in the commercial motor market has grown strongly in the first six months of 2014 compared with 2013, with the overall market for light commercial and heavy commercial vehicles up by 37 per cent and 42 per cent respectively on the same period last year.

“We are seeing some very encouraging signs of increased demand from our business customers. Whilst some of this activity can be attributed to some competitors leaving the market, we are also seeing some positive signs of renewed investment in key sectors of the economy,” Mr Lauhoff said.