Lending continues to decline

Lending to banks and businesses declined once again during the final quarter of 2009, according to new figures from the Central Bank released today.

The data shows that lending to the financial intermediation sector slowed significantly during the quarter under review and was relatively unchanged over the year as a whole. This follows year-on-year growth in excess of 20 per cent from the third quarter 2007 to the first quarter of 2009.

Lending to the non-property, non-financial business sectors declined during by almost €2.1 billion, or 4.2 per cent during the fourth quarter with credit outstanding to these industries falling by 11.3 per cent in 2009 as a whole.

The Central Bank's report shows lending to the property-related business sectors fell by almost €3.3 billion during the last quarter of 2009.

On an annual basis, credit to the construction and real estate sectors fell by a combined 9.4 per cent in 2009. Write-downs and rising bad debt provisions continued to be significant factors in the quarterly and annual developments in credit to these combined sectors, the Central Bank said.

Private-sector credit (PSC) outstanding declined by 6 per cent last year. Two-thirds of this decline was due to write-downs of existing credit arrangements and increased provisions for bad and doubtful debts. PSC fell by 4.2 per cent during the last quarter of 2009, with credit to the majority of economic sectors declining over the quarter.

Lending to the personal sector, inclusive of securitised residential mortgages, fell by €1.3 billion during the fourth quarter of 2009. Underlying this was a fall of €1 billion in non-mortgage credit, while mortgage lending was €315 million lower than the preceding quarter.

In 2009 as a whole, personal-sector credit fell by 2.8 per cent.

Total residential mortgages outstanding decreased by €315 million over the final quarter of 2009. There was a combined increase of €218 million in mortgages for buy-to-let properties and holiday homes during the quarter, whereas mortgages for principal dwelling houses declined by €533 million.

Overall residential mortgage lending declined by 0.3 per cent in the year ending December 31st 2009.