Source: Central Bank

The Central Bank said today that Irish private-sector credit (PSC)/bank lending continued to fall in June, declining by €1.4 billion, following May’s €1.6 billion decline. As in recent months, this was mostly due to write-downs of loans with the underlying amount of credit outstanding remaining relatively unchanged. The annual rate of change in PSC turned negative in June, to minus 0.7 per cent. This is the first annual decrease recorded since the Central Bank began analysing PSC on the current basis. Residential mortgage lending outstanding declined by €62 million in June - - the third consecutive month of decline. The increase from a year earlier was down to 1.9 per cent in June, the lowest on record.

The Bank said the €1.4 billion decline in PSC during the month of June compares with monthly falls of €1.8 billion and €1.6 billion in April and May respectively. A reduction of €2.4 billion in credit outstanding to non-financial corporates (NFCs) was the main component underlying the fall in PSC in June. While write-downs of existing loans and increased provisions contributed to the reduction in NFC credit outstanding in June, most of the decrease can be attributed to a reduction in the underlying flow of credit to NFCs.

Simply, business lending fell in the month.

Term/revolving loans declined by €1.4 billion and overdrafts decreased by €85 million.

Outstanding debt on personal credit cards rose €20.5 million.

Residential mortgages (including securitised mortgages) fell by €62 million in June, the third consecutive monthly decline. Mortgage debt outstanding has remained relatively stable since the beginning of 2009, only increasing by €234 million in the first half of the year, compared with €5.5 billion for the same period in 2008. The annual rate of increase in outstanding residential mortgages declined to 1.9 per cent in June, from 2.6 per cent in May, the lowest annual rate of increase on record. The increase in loans to households for house purchase has also been weak in the Eurozone, with an annual growth rate of 0.5 per cent in June.