Lending to households falls 4% in 12 months

Lending to households fell 4% in the 12 months to the end of January following a 3.9% decrease in December, according to figures released by the Central Bank.

Mortgage lending was down 1.8% on an annual basis at the end of January while lending for consumption and other purposes fell by 10% over the same period.

“Lending to households declined by €816m during the month of January, following a net monthly decrease of €372m during December,” the report states.

“The change during January was mainly driven by decreases of €405m and €344m in housing and consumption-related loans respectively. Meanwhile, loans for non-housing and non-consumption purposes were €68m lower over the month.”

Business lending fell by 3.3% to the end of January following a 3.6% drop in December.

However, private sector deposits grew at an annual rate of 3.7% to the end of January — a further sign that the banking system continues to deleverage.

There was a month-on-month increase of almost €1.4bn in resident private-sector deposits during Jan 2013, reflecting rises across all four of the depositor sectors, the Central Bank said. Household and corporate deposits rose €33m and €120m in January, respectively.

“Although there has been some sign of improvement in the deposits side in the past few months, Ireland remains a long way from where it wants/needs to be as regards credit supply/demand to get the domestic economy moving again,” said Alan McQuaid, an economist with Merrion Stockbrokers.