Lending to households and companies continued to decline in October, falling €2.3 billion compared to September, new figures from the Central Bank showed today.
The fall in October to €375.8 billion follows a €4.4 billion decline the previous month.
The Central Bank said the latest drop was mainly due to valuation effects such as a stronger euro, write-downs of loans and increased provisions for bad debts. The underlying stock of credit was relatively unchanged on a monthly basis when valuation effects were set aside.
On an annual basis, private-sector credit fell by €13.5 billion, or 3.7 per cent, in the year ending October 2009. The Central Bank blamed valuation effects for 90 per cent of the annual decline.
Lending to companies dipped 1.2 per cent in during the month, and 9 per cent on an annual basis.
"Adjusting for valuation effects, approximately one-tenth of this decline can be attributed to a reduction in the underlying stock of credit to non-financial corporations, as a result of repayments exceeding drawdowns during the month," the Central Bank said.
Residential mortgage lending also fell in October, marking a seventh consecutive month of decline. Mortgages outstanding at end of October totalled €147.8 billion.
Meanwhile, non-housing related household credit further declined during October, falling 18 per cent lower on an annual basis.
The figures showed outstanding debt on personal credit cards was unchanged on a year-to-year basis in October; however, the average debt per personal card had risen 1.8 per cent in the year to the end of October, and the number of personal credit cards in use fell.
The data showed the level of debt on the cards decreased slightly during the month, marking another month where repayments have exceeded new spending.
Ireland's monetary financial institutions (MFI), meanwhile, accounted for €208 billion of the euro area's broad money supply (M3) in October. M3 grew 6 per cent in the year to the end of October, representing the largest annual increase since January 2008.
According to the Central Bank, the value of debt securities up to two years maturity issued by Irish credit institutions in October fell €158 million, while holdings of debt securities issued by euro-area MFIs showed a decline of €1.7 billion.
