Consumer lending grows at highest annual rate since financial crash

Consumer lending increased by 7.3 per cent in the year to September, which marked the highest annual growth rate since November 2008 at the height of the financial crash, new data from the Central Bank shows.

Net consumer lending amounted to €48 million in September, which contributed to the increase in the annual growth rate to 7.3 per cent from 6.8 per cent in August. Loans for other purposes recorded net repayments of €43 million in September.

The annual growth in consumer lending has been consistently positive for the last 21 months, the regulator said in a note on Tuesday. Net lending increased by €361 million in the third quarter of 2023, which was up from €291 million in the previous quarter.

Monthly and annual flows in consumer credit in September were driven by loans maturing over one to five years.

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Extended credit card debt stood at €822 million at the end of September, up 4.8 per cent on an annual basis. That compared with 1.4 per cent at the end of September last year

Net lending to households increased in September to €231 million from €216 million in August. The rise was mainly driven by an increase in loans for house purchase, but the Central Bank pointed out that end-quarter months generally see larger than average increases due to seasonal statistical impacts.

On an annual basis household loans increased by 1.5 per cent, up from 1.4 per cent in August.

The annual change in loans for house purchase, when including both on-balance sheet and securitised loans, rose by 1.3 per cent in September, up slightly from 1.2 per cent in August.

Household deposits were €664 million higher in September at €153 billion. The increase in August was €489 million. On an annual basis household deposits recorded a net increase of €5.8 billion.

The annual growth rate slowed slightly to 3.9 per cent from 4.3 per cent in August. Deposits with agreed maturity up to two years continued to be the main driver of the rise in household deposits, increasing by €635 million in the month. Deposits with agreed maturity accounted for all of the increase in household deposits in the third quarter.

Net lending to non-financial corporations turned negative in September, at -€128 million. In annual terms non-financial corporation lending slowed further to -2.4 per cent in September, from -1.2 per cent in August.

Deposits from non-financial corporations stood at €78 billion at the end of September. There were net withdrawals of €2 billion during the month, compared to withdrawals of €589 million in August.