Following a spike in NFC lending at the onset of the COVID crisis, repayments have now exceeded gross new lending for the past 3 months. This has led the annual growth rate in the series to turn negative, reaching levels of decline last seen in 2017.
Developments in Household credit and deposits
- Net lending to Irish households recorded a decline of €204 million in July. On an annual basis, loans to households recorded growth of €213 million; this was the lowest annual net lending since 2017.
- Loans for house purchase decreased in net terms by €88 million in July (Chart 1). Annual growth in the year to end July was €930 million or 1.2 per cent.
- Consumer lending saw a decline of €116 million in July. Annually, repayments exceeded new lending by €591 million over the year to end-July. This was the largest excess of repayments over gross new lending seen since 2015.
- Household deposits recorded a net inflow of almost €2 billion in July (Chart 2). In annual terms, lodgements were €11.8 billion higher than withdrawals, the highest annual increase in household deposits since the series began.
- Overnight deposits, which include current accounts,were the driver within the monthly and annual increases in household deposits (Chart 3). They recorded an increase of €2.1 billion in July and grew by €14.2 billion, or 16.1 per cent in annual terms.
Developments in NFC credit and deposits
- Net lending to non-financial corporations (NFCs) remained negative in July, contracting by €510 million. On an annual basis, loans declined by €1.2 billion. Short-term loans continued to drive the monthly and annual declines in lending to NFCs (Chart 4).
- NFC deposits continued to record strong growth in July, recording a monthly net inflow of €1.9 billion. This increase was mainly attributable to overnight deposits and repurchase agreements. In annual terms NFC deposits increased by €9.5 billion, marking the largest annual increase in NFC deposits since December 2019 (Chart 5).
Developments in other counterparty sectors
- The annual growth rate in total bank lending declined by 0.9 per cent (Chart 6), driven by a decline in lending to the private sector. Lending to the private sector, which accounts for 77 per cent of banks’ loan books, declined in annual terms, by 1.5 per cent.
- Bank deposits from Irish resident other financial institutions (including insurance corporations and pension funds) increased by €416 million during the month, driven by overnight deposits and repurchase agreements.
- Credit institutions’ holdings of Irish-issued debt and equity securities recorded a net increase of €152 million in July 2020. This was driven by an increase in MFI securities.
Money and Banking statistics cover all credit institutions resident in Ireland. This includes licensed banks, building societies and, since January 2009, credit unions. A resident office means an office or branch of the reporting institution which is located in the Republic of Ireland. Data are reported in respect of resident office business only. Recent data are often provisional and may be subject to revision. For further detail, please see the Money and Banking webpage for:
- An extensive set of Money and Banking Tables;
- A list of Irish Resident Credit Institutions;
- Money and Banking statistics Explanatory Note.
Irish-headquartered banks refers to institutions whose ultimate parent entity is resident in Ireland.
A number of lenders have agreed payment breaks with their customers since the onset of the COVID-19 crisis. These breaks are likely to significantly affect the Money and Banking lending data in this period, predominantly by keeping outstanding loan balances higher than they would be, had repayments followed their initial schedule. As well as this, June data is affected by quarterly interest capitalisation, which increases balances in on-quarter months.
Please note that data for credit unions is reported with a delay. Therefore, the effects of the COVID-19 crisis and the subsequent lockdown measures on credit union loans and deposits are only beginning to be seen in July data. Movements in overall July household deposit and consumer lending data are impacted by this.