Lending to Irish consumers and companies continued to fall in July, but the pace of decline has moderated, new figures showed today.
Deposits at Irish banks also continued to fall, but deposits from non-euro area residents rose during the month.
The Central Bank said decline in loans to households held steady in July, remaining at 3.9 per cent over the year, while loans to companies were 2.4 per cent down on the previous year, compared to 3 per cent in June.
Mortgage lending continued to fall, with home loans 2.4 per cent lower, while lending for consumption and other purposes was 8.8 per cent lower in the year.
Household lending was down by €709 million last month as mortgage lending fell €334 million and consumption loans were down €292 million.
On a monthly basis, loans to non-financial corporates rose by €158 million, lower than the €343 million rise recorded in June.
"The fact that the flow of credit has actually increased for the last two months is a positive.," said Goodbody chief economist Dermot O'Leary. "However, over the past 12 months, the flow of credit to households and non-financial corporates in Ireland has fallen by €7.8 billion, equivalent to 5 per cent of gross domestic product. This goes a long way in explaining the estimated 4 per cent decline in domestic demand in the first half of the year."
Irish resident private-sector deposits fell by 10.4 per cent over the year to the end of July, picking up the pace slightly from the 10 per cent fall recorded in June.
Household deposits declined by 5.6 per cent on an annual basis, while company deposits were 11.4 per cent lower.
The Central Bank said deposits from other euro area resident private sector fell by €501 million during July, while non-euro area residents' deposits rose by €1.1 billion.
Over the year, private-sector deposits from other euro area residents fell by 13.4 per cent and those outside the euro area fell by 24.6 per cent.
A sharp fall in Government deposits was attributed to the completion of the latest programme of recapitalising the banking system, with the withdrawn funds then re-injected as capital into various institutions.
The Central Bank said there was an underlying decline of just over €1 billion in private sector deposits during July, with household deposits down by €445 million during the month. However, deposits from companies rose during the month, increasing by €95 million.