ENP Newswire - 01 September 2014
Release date- 29082014 - Lending to households and non-financial corporations by credit institutions continued to contract on an annual basis, as repayments exceeded new lending.
Resident private-sector deposits also declined on an annual basis, despite the second consecutive month of net inflows in July.
Loans and other credit
Household loan repayments exceeded drawdowns by EUR437 million during July 2014, following a net monthly decrease of EUR104 million in June. Developments in July were mainly driven by a EUR255 million decline in loans for house purchase.
On an annual basis, lending to Irish households continued to fall, decreasing by 3.9 per cent in July 2014. Loans for house purchase, which account for 80 per cent of total household loans, declined at an annual rate of 3.1 per cent. Lending for consumption and other purposes declined by 6.5 per cent over the year.
The outstanding stock of loans to the Irish private sector declined by approximately EUR9 billion during July 2014. This decline primarily reflects changes in the reporting population.
NFC loan repayments exceeded drawdowns by EUR880 million in July 2014 following a net decline of EUR1.6 billion in June 2014. The fall was most pronounced for loans of up to 1 year which decreased by EUR617 million over the month. Meanwhile, medium and long-term NFC loans showed reductions of EUR157 million and EUR107 million, respectively.
Lending to Irish resident NFCs reported a year-on-year decline of 8.2 per cent in July 2014, following an annual decrease of 7.3 per cent in June. This resulted from declines across all maturity categories, with annual declines of 9.1 per cent, 9.6 per cent and 6.6 per cent recorded for short, medium and long-term sectors, respectively.
Credit institutions' holdings of debt and equity securities issued by the Irish private sector decreased by EUR239 million during July 2014, following a decrease of EUR2.5 billion in June. A fall of EUR328 million in holdings of securities issued by the OFI sector was the predominant reason for the month-on-month change. This brought the annual rate of decline at end-July to 15.9 per cent.
Deposits and other funding
Irish resident private-sector deposits increased by EUR153 million during July 2014; this was mainly driven by a EUR135 million increase in deposits from the OFI sector and to a lesser extent by a EUR50 million increase in deposits from the ICPF sector. The reduction in deposits from the household and NFC sectors of EUR30 million and EUR2 million, respectively, partially offset the afore-mentioned increases.
Looking at the maturity breakdown, overnight deposits, which include current accounts, increased by EUR816 million in July 2014. This reflects the increase in overnight deposits across all counterparty sectors, the most pronounced of which was a EUR400 increase from the household sector.
Deposits with agreed maturity up to two years decreased by EUR558 million during July 2014. This resulted from falls in deposits from the household, NFC and ICPF sectors of EUR367 million, EUR184 million and EUR79 million, respectively. Meanwhile, medium-term deposits from the OFI sector increased by EUR72 million over the month.
Deposits with agreed maturity over two years decreased by EUR62 million during the month of July. Household, ICPF and NFC sectors all recorded declines of EUR50 million, EUR30 million and EUR11million, respectively. By contrast, longer-term deposits from the OFI sector showed an increase of EUR29 million in July 2014.
On an annual basis, deposits from the Irish resident private sector declined at a rate of 3.1 per cent in July 2014, following a fall of 3.2 per cent in June. Exhibiting similar trends to last month, NFC deposits increased over the year by 15.6 per cent; meanwhile, deposits from ICPFs declined by 12.6 per cent and household deposits remained unchanged from the previous year.
The annual rate of change in OFI deposits was minus 19.6 per cent in July 2014, compared to an annual increase of 40.9 per cent in July 2013. This development is due to base effects, driven by a transaction in March 2013 related to the liquidation of the Irish Bank Resolution Corporation (IBRC). IBRC's liability to the Central Bank of Ireland was replaced by a liability to the National Asset Management Agency (NAMA), classified as an overnight deposit.
Non-resident private-sector deposits increased by EUR824 million during July 2014, following a revised increase of EUR436 million in June. Developments in July were mainly driven by an EUR845 million increase in private sector deposits from non-euro area residents, the majority of which was deposited in IFSC banks. Private-sector deposits from other-euro area residents fell by EUR21 million over the month. In annual terms, private-sector deposits from non-euro area residents decreased by 7.7 per cent, compared to a 4.1 per cent decline in deposits from other euro area residents.
Credit institutions' borrowings from the Central Bank as part of Eurosystem monetary policy operations fell by EUR85 million in July 2014. The outstanding stock of these borrowings remained at EUR23.2 billion at end-July. The domestic market group of credit institutions accounted for EUR16.4 billion of this total outstanding stock and current levels represent the lowest level of reliance on central bank funding since June 2008.
Note to editors:
Money and Banking Statistics currently include an aggregate balance sheet for the entire population of resident credit institutions, reported in Table A.4. Please note that the composition of the subsets of the population reported in Tables A.4.1 and A.4.2 have been updated as follows:
A.4.1 - Domestic Market Group: Institutions whose ultimate parent entity is resident in Ireland (including credit unions), or which have a significant (>20 per cent) level of business with Irish households and non-financial corporations in terms of their overall resident business activity.
A.4.2 - Irish-Headquartered Group: Institutions whose ultimate parent entity is resident in Ireland. This includes all credit unions.
A full list of credit institutions resident in the Republic of Ireland, as well as the subset of institutions that comprise the Domestic Market Group, are available in the Credit, Money and Banking section of the Central Bank website.
 Money and Banking statistics are compiled in respect of business written out of all within-the-State offices of both credit institutions authorised to carry on banking business in the State under Irish legislation and credit institutions authorised in other Member States of the EU operating in Ireland on a branch basis. Credit institutions authorised in other EU Member States operating in Ireland on a cross-border basis, i.e. with no physical presence in the State, are not included in the statistics. A full list of Credit Institutions resident in the Republic of Ireland is available on the Central Bank of Ireland website. Recent data are often provisional and may be subject to revision. The extensive set of Money and Banking Statistics tables are also available on the Central Bank website, along with the detailed Money and Banking Explanatory Notes.
 Changes in outstanding amounts need to be interpreted with caution, as they are increasingly influenced by reclassifications, including loan sales and changes in reporting population. Transactions and growth rates are better measures of activity over any given period.