Household lending continues to fall

Lending to Irish households and companies fell in 2012, while deposits rose, new data from the Central Bank showed today.

Loans to households fell at a rate of 3.9 per cent in the year to December, picking up pace from the 3.6 per cent recorded in November.

The figures showed lending for house purchases fell by 1.6 per cent over the year, with a 10 per cent decline in loans for consumption and other purposes.

Month on month, the value of loans to households fell by €372 million last month, mainly fuelled by a fall of €324 million in the non-housing and non-consumption related loans. Home loans were down by almost €4 million, and loans for consumption were €44 million lower over the month.

Companies also saw a decline in lending, with overall figures showing a 3.6 per cent fall over the year.

On a monthly basis, company loans were down by €385 million compared with November, the Central Bank said.

Medium term loans fell by €306 million during the month, with short-term loans down by €168 million. Longer-term loans were €88 million higher.

Private-sector deposits climbed by 2.5 per cent in December, with both household and company deposits increasing by 1.1 per cent over the year. Insurance firms, pension funds and non-bank financial intermediaries increased their deposits by 6.9 per cent.

The data also showed that Irish banks' dependence on Central Bank funding continued to fall in December, with analysts attributing it to the stability in deposits, deleveraging and a return to market financing that allowed banks to access the markets in the final two months of 2012.