First chart from Feb 2007; Second chart from Sept 2006 - - Source: Irish Central Bank

The Central Bank reported today that the annual growth in Irish private sector credit fell again in February. Residential mortgage loans and household credit outstanding dipped.

The Bank said private-sector credit (PSC), excluding lending to non-bank IFSC companies, declined by €1.3 billion during February 2010. This change was almost entirely due to underlying transactions, i.e. repayments exceeding draw-downs. The annual rate of change in headline PSC declined further in February, to minus 7.3 per cent. When all valuation effects are excluded, the underlying stock of PSC was 3.5 per cent lower on an annual basis in February 2010.

Household credit, excluding valuation effects, was 2.4 per cent lower on an annual basis in February 2010. Residential mortgage loans outstanding (including securitised mortgages) declined by €156 million during February, bringing the annual rate of decline in residential mortgage lending to minus 0.9 per cent.

On business credit to non-financial companies (NFC), the Bank said, excluding valuation effects and the impact of securitisations, outstanding loans continued to decline in February 2010. The annual rate of change in NFC credit was minus 3.7 per cent in February, following a revised 3 per cent decline in January 2010 and a 1.9 per cent fall for December 2009. NFC credit outstanding was €146.8 billion at end-February 2010, down from €149.2 billion at end-January. Just under half of this decline was due to transactions, i.e. repayments being greater than draw-downs, giving an underlying fall in NFC credit of 0.8 per cent during February, with the remainder of the decline in outstanding amounts mostly due to the securitisation of NFC loans.

The Central Bank said repayments on personal credit cards were approximately €26 million higher than new spending on credit cards during the month. The year-on-year change in personal credit card debt turned positive again in February to 0.5 per cent, partly due to the base effect of the significant reduction in credit card debt seen in early 2009, as repayments exceeded new spending by €237 million during Q1 2009. The combined developments in both mortgage and non-mortgage credit during February, excluding valuation effects, led to a reduction of 0.3 per cent in total household credit during the month. On a year-to-year basis, household credit declined by 2.4 per cent in February 2010, following year-on-year declines of 1.5 per cent and 2.2 per cent in December 2009 and January 2010, respectively

The Bank said that the acquisition of toxic property loans by the State 'bad bank', the National Asset Management Agency (NAMA), which have already begun this month, will have a significant impact on the data series published by the Central Bank and will begin to be reflected in the April 2010 Monthly Statistics.