Inflows ease deposit crisis in banks but lending is still falling
THE deposits crisis in Ireland's banks eased markedly in March but lending woes continued as banks suffered another monthly contraction in their loan books.
The contrasting deposit and loans trends were revealed in the Central Bank's monthly money and banking statistics, while a separate Department of Finance statement claimed deposits at the bailed-out banks rose €2.1bn in March.
Irish institutions have seen their deposit bases decimated since the crisis hit, with total deposits in the 'domestic' banks plummeting from €552bn in September 2008 to €326bn by February 2012.
The 'covered banks' -- bailed- out Bank of Ireland, AIB, Permanent TSB and Irish Bank Resolution Corporation -- have seen an even sharper fall as deposits dropped 67pc from September 2008 to about €253m this February.
"The most positive aspect of today's release . . . is confirmation that household and non-financial corporation deposits increased by €779m in March," said Goodbody's chief economist Dermot O'Leary.
"This is the largest monthly increase since October 2009."
Separate figures from the Department of Finance, compiled using a different methodology, claim deposits at the bailed-out banks actually rose €2.1bn in March, the largest rise since September 2011.
About half this increase came from Ireland, it said, describing this as an "encouraging trend".
Despite the higher level of deposit funding, the amount of central bank money supporting the domestic banks rose from €71.3bn to almost €75bn. This was largely because the ECB's second whack of three-year liquidity flowed into the banking system in March.
On the lending side, domestic banks' outstanding loans to Irish residents fell for the fourth month in a row, dropping from €331.9bn to €328.3bn, while loans to non-residents remained virtually unchanged.
The Central Bank paper said household credit was down 3.9pc year-on-year, while business credit was down 2.3pc, a rate of decline similar to that seen in previous months.