Business Irish

Sunday 24 September 2017

Residents' money on deposit falls to €167.3bn during May

Peter Flanagan

Peter Flanagan

Value of loans to households drops by €264m to €109bn

THE amount of money on deposit from Irish residents fell for the first time since January last month and bank lending continued to slide, new figures showed yesterday.

The latest money and banking statistics from the Central Bank showed Irish resident private-sector deposits slid by €69m to €167.3bn during May.

Compared with the same month a year ago, deposits were down 3pc. Private-sector residents had €172.5bn on deposit here 12 months ago.

Deposits are now up nearly 70pc in the last decade. In January 2003, less than €100bn was on deposit.

The slide in deposits came as lending to households continued to fall during May, albeit at a slower pace than previously.

Households

The bank's figures show the value of loans to households dropped €264m to €109bn, for a 3.9pc year-on-year drop. The drop, however, was about half the rate of the previous month, when lending slumped nearly €600m.

Some 73pc of those loans were for house purchases, while the remainder were for a mixture of consumer credit and other purposes.

Most of the decline in household lending came from the house purchases side of business, which dropped €242m month on month.

The amount of money borrowed by Irish households has now fallen by nearly 30pc since the peak of the boom in mid-2008.

On a monthly basis, loans to non-financial corporations (NFCs) decreased by €338m during May, continuing on from a €326m drop in April. The monthly net flow of loans to NFCs averaged minus €210m in the three months ending May 2012, compared with an average of minus €153m in the three-months to the end of April.

Short-term loans to NFCs -- defined as having an original maturity date of one year or less -- including the use of overdraft facilities, increased during May by €68m.

That was a slower pace than April, when €155m in short-term loans was handed out. Medium-term NFC loans fell €301m, and longer-term NFC loans also fell €105m.

Dipped

Private-sector overnight deposits dipped by €199m during the month. Household-sector overnight deposits slid €30m, while overnight deposits from Insurance Corporations and Pension Funds (ICPFs) also dropped, tumbling €118m. Overnight deposits from the NFC sector gained €95m.

The Irish figures came as loans to eurozone households and firms shrank in May.

Loans to the private sector fell 0.1pc in May from the same month a year ago, ECB data showed.

"The ECB should do something," said Christian Schulz of Berenberg Bank.

"But it should also think about whether the existing tools of rates cuts and maybe liquidity provision are enough or whether they should potentially think about addressing the actual underlying problem, which is the eurozone crisis, and potentially even buy sovereign bonds directly."

Irish Independent

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