Central Bank reports decline in household lending

Lending to Irish households continued to fall in November, but deposits at Irish institutions rose, according to new figures from the Central Bank.

The money and banking statistics show loans to households fell by 4.3 per cent in the year to November, as consumers maintained a trend of increasing savings and paying down debt.

The amount repaid during the month was €403 million higher than the value of draw-downs.

Lending for house purchase was the main category driving the change, declining at an annual rate of 2.8 per cent.

Lending for consumption and other purposes, which accounts for about 23 per cent of total household lending, fell by 9 per cent over the same period.

Meanwhile, the annual rate of change in Irish private-sector deposits remained positive in November. Private-sector deposits were 8.5 per cent higher in the year to the end of November, following an annual rise of 7.6 per cent in October.

There was a monthly decrease of €322 million in Irish resident private-sector deposits during November. This was due to a fall in deposits from households and insurance corporations and pension funds of €582 million and €115 million, respectively.

Against that, deposits from other financial intermediaries and non-financial corporates showed respective increases of €310 million and €65 million over the month.

Excluding the impact of the IBRC liquidation transaction last March, other financial intermediaries’ deposits would have fallen 0.2 per cent on an annual basis in November and total private-sector deposits would have been up 0.7 per cent over the year.

In a research note yesterday, Merrion economist Alan McQuaid said data around credit remains “the most disappointing as regards Ireland’s recovery story”.

“These latest figures show that there is still little real progress being made in terms of advancing loans to households or indeed the SME sector. As a result, this will severely hamper the overall recovery prospects for the housing market and the Irish economy as a whole, and keep the unemployment rate higher than it would otherwise be,” he said.

Meanwhile, credit institutions’ borrowings from the Central Bank as part of Eurosystem monetary policy operations fell by €860 million last November.

The Central Bank said the outstanding stock of these borrowings amounted to €39.7 billion at November-end.