Household lending continues decline

Lending to households and companies continued its downward trend in April, with loans down by 4 per cent year on year, new data from the Central Bank showed today.

But private sector deposits at Irish-based banks rose for the third month in a row, slowing the annual rate of decline.

Lending for home purchases fell by 2.5 per cent year on year, with consumption and other purposes down by 8.4 per cent. Over the month, household lending fell by €632 million, largely due to a fall in the value of loans for consumption purposes of €394 million.

Companies also felt the pinch, with lending down 1.8 per cent over the year. However, this was a slowdown from the 2.2 per cent recorded in March.

Monthly figures showed loans to companies were €326 million lower in April, reversing the trend seen in the previous month where lending increased by €34 million. Short-term loans, which includes overdrafts, were €155 million higher, but medium-term company loans declined by €428 million, and longer-term loans were down by €53 million.

Irish banks' borrowings from the European Central Bank were €90 billion by the end of April. Domestic Irish institutions accounted for €77 billion of that figure, a €2 billion increase month on month.

Private sector deposits at Irish-based banks rose for the third month in a row in April, slowing the annual rate of decline.

Data from the Central Bank showed deposits rose by €4 billion in April, with the majority coming from the financial sector. Over the year, deposits fell by 3.4 per cent, the slowest pace since August 2010

"We tend to focus on household and non-financial corporate deposits, which account for three-quarters of private sector deposits. In April deposits in these categories were up a combined €187 million, a very modest amount but positive nonetheless. Non-resident deposits were relatively unchanged in April," said Goodbody chief economist Dermot O'Leary.

Separately, figures from the Department of Finance showed deposits at Government-guaranteed lenders rose by €2.1 billion during April, or 1.4 per cent, to €151 billion over the period.

These figures exclude the effects of intra-group deposits and also takes into account the deposits held by affiliates outside Ireland.

"Slightly under half of the increase during the month came from the domestic deposit base, with much of the growth in the non-Irish element related to euro weakness," a statement from the department said.

Deposits in the banks have increased from their 2011 low of €140 billion in June, July and August.

Euro weakness in April "provided an added translation boost for deposits source in the UK," the department said.