Loans to households and companies continued to fall in the year to August, with the overall pace of decline picking up pace slightly, compared with the previous month.

The latest figures from the Central Bank showed a 4 per cent decline over the year, with lending for house purchases down 2.4 per cent, and loans for consumption and other purposes down 9.1 per cent over the year.

The data showed household lending fell by €443 million during August, as loans for homes fell by €242 million. This follows a net monthly flow of minus €710 million in July.

Companies saw lending decline by 2.5 per cent over the year, compared with 2.4 per cent in the year to July.

Loans to non-financial corporates were €436 million during the month, compared with an increase of €158 million in July.

Deposits were also down over the year, falling by 10.4 per cent by the end of August. Household deposits were 5.4 per cent lower on an annual basis, and company deposits were down by 10.1 per cent.

The figures showed an underlying decline of €895 million in private-sector deposits during August, with household deposits falling by €510 million during the month. However, deposits from non-financial corporates were €459 million higher during the month.

"The bottom line is that we are still a long way from where we want/need to be to get the domestic economy moving again," Bloxham chief economist Alan McQuaid said.

"The reality is that until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will remain subdued in our view, severely hampering the recovery prospects for the economy as a whole in the process."