Household deposits down on last year as spending resumes

Deposits were up by €453m to €132bn in June, but this was almost half of last year’s figure

The figures from the Central bank show the annual rate of growth in household deposits remains at an elevated level.

The figures from the Central bank show the annual rate of growth in household deposits remains at an elevated level.

 

Irish household deposits increased by €453 million to €132 billion in June, but this was significantly down on the same period last year when Covid-19 health restrictions heavily constrained activity.

The latest figures from the Central bank show the annual rate of growth in household deposits remains at an elevated level relative to its pre-Covid average, but this has slowed in recent months from its 14 per cent February peak to stand at 11.5 per cent in June.

The €453 million increase in household deposits in June compares with an increase of €845 million in the same month in 2020.

Net lending to households increased by €226 million in June. In annual terms net lending amounted to only €28 million. This contrasts with June 2020, when €647 million of net annual lending was recorded.

Loans for house purchase increased by €195 million in net terms over the month, though seasonal effects influence the quarter-end figures. In annual terms the growth rate remained positive at 0.7 per cent, but down from 1.4 per cent a year earlier.

Consumer lending saw a net increase of €42 million in June 2021, a further increase from the month of May. Despite this the annual growth rate in the year to end-May remained negative, with consumer lending decreasing by €370 million or 3.1 per cent.

In annual terms, lodgements exceeded withdrawals by €13.6 billion or 11.5 per cent. Overnight deposits, which include current accounts, were the driver of the monthly and annual increases in household deposits.

Positive

Net lending to non-financial corporations (NFCs) was positive in June, rising to €278 million during the month. However, on an annual basis loan repayments exceeded drawdowns by €1.3 billion.

The annual rate of change in total NFC lending was -3.4 per cent. This compared with a growth rate of -2.5 per cent in June 2020.

There was a positive net flow in deposits from NFCs, increasing by €1.5 billion in June. On an annual basis the growth rate of 14.9 per cent in June was less than May’s at 15.8 per cent.

Total bank lending to Irish-resident sectors declined by 4.2 per cent in the year, partly driven by a decline in lending to the private sector, which experienced a fall of 2 per cent.

Banks’ holdings of deposits from the Irish-resident private sector continued to record strong inflows, with annual growth at 13.6 per cent as at end-June. Irish-resident households remain the largest contributing sector to deposits on banks’ aggregate balance sheet.

Irish-resident banks’ outstanding borrowing from the Central Bank as part of Eurosystem monetary policy operations rose in June, and now stands at €24 billion.