The rate of decline in loans to households accelerated in December, and private sector deposits also fell, new data from the Central Bank showed today.
The figures covering the year to the end of December showed a decline of 5.2 per cent in lending, compared to 4.8 per cent in November.
There was a decline of 1.9 per cent in loans for house purchases in the year to December, while loans for consumption and other purposes were down by 16.6 per cent.
During the month of December, household lending declined fell by €265 million, as lending for consumption purposes contracted by €316 million. This was partially offset by a rise in lending for house purchases of €48 million.
However, although lending to companies continued to fall, the pace of decline moderated in the final month of the year from 1.9 per cent in November to 1.2 per cent in December.
Loan repayments by non-financial corporates were €51 million greater than draw-downs during the month.
Private-sector deposits fell €3 billion in December after the Government sought rescue a bailout from the European Union and International Monetary Fund to help shore up the banks and public finances.
Deposits from sources including households, pension funds and companies fell by 2.2 per cent to €168.3 billion.
Irish resident private-sector deposits 7.6 per cent lower and deposits from Irish households down 4.7 per cent in the year to the end of December. Irish NFC deposits were 16.1 per cent lower.
"Until we see a stabilisation of deposits, the banks are going to be increasing dependent on either the European Central Bank or the Irish central bank for funding," said Dermot O'Leary, chief economist with Dublin-based Goodbody Stockbrokers.
Bloxham's Alan McQuaid said there was very little good news in the figures.
"Getting the banks back to some sort of ‘normal’ lending practices should be the key objective of a new government," he said.
"Until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will remain subdued in our view, severely hampering the recovery prospects for the economy as a whole in the process."
