Further drop in consumer lending

NOVEMBER saw a continuing fall in consumer lending levels, although there was evidence of a marginal increase in corporate loan activity.

New monthly figures from the Central Bank, which were published yesterday, show that overall lending to households fell by 4.1% or €363 million in November, when measured on a year-by-year basis.

This follows on from an annualised fall in household lending of 3.9% in October.

At the centre of the November trends was a 2.7% year-on-year fall in mortgage lending — a full €221m less than for the same month in 2010.

According to the Central Bank, lending for consumption “and other purposes” declined by 8.6% over the same period.

November’s mortgage lending figures follow on from a 2.6% annualised decline in October.

The updated stats also show an upturn in lending to business — with loans to non-financial corporates increasing by €39m in November.

While this increase was only slight, it followed on from an annualised fall of €450m in October.

Earlier this month, the Central Bank reported that bank lending to the small business sector fell by 8.2% during the third quarter of the year on a year-on-year basis.

This amounted to a drop of €2.5 billion and followed on from a larger 9.8% annualised drop seen in October.

November also saw an underlying decline of €1.3bn in Irish resident private-sector deposits, representing a 9% year-on-year decline.

This was driven by a €1.2bn fall in the value of bank deposits by households, compared to the same month last year.

However, the Central Bank said: “This can partly be explained by seasonal factors, as household deposits have fallen, in November, for each year since 2004.”

Deposits from Irish-resident non-financial companies also fell during November by €155m.

Meanwhile, the amount which has been borrowed by financial institutions from the Central Bank as part of the euro system rose by €3bn during November to €103.9bn.

The domestic banks accounted for €73.1bn of this, up by €1.6bn from October.