Household deposits down on last year as spending resumes

Irish household deposits increased by €453 million to €132 billion in June, but this was significantly down on the same period last year when Covid-19 health restrictions heavily constrained activity.

The latest figures from the Central bank show the annual rate of growth in household deposits remains at an elevated level relative to its pre-Covid average, but this has slowed in recent months from its 14 per cent February peak to stand at 11.5 per cent in June.

The €453 million increase in household deposits in June compares with an increase of €845 million in the same month in 2020.

Net lending to households increased by €226 million in June. In annual terms net lending amounted to only €28 million. This contrasts with June 2020, when €647 million of net annual lending was recorded.

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Loans for house purchase increased by €195 million in net terms over the month, though seasonal effects influence the quarter-end figures. In annual terms the growth rate remained positive at 0.7 per cent, but down from 1.4 per cent a year earlier.

Consumer lending saw a net increase of €42 million in June 2021, a further increase from the month of May. Despite this the annual growth rate in the year to end-May remained negative, with consumer lending decreasing by €370 million or 3.1 per cent.

In annual terms, lodgements exceeded withdrawals by €13.6 billion or 11.5 per cent. Overnight deposits, which include current accounts, were the driver of the monthly and annual increases in household deposits.

Positive

Net lending to non-financial corporations (NFCs) was positive in June, rising to €278 million during the month. However, on an annual basis loan repayments exceeded drawdowns by €1.3 billion.

The annual rate of change in total NFC lending was -3.4 per cent. This compared with a growth rate of -2.5 per cent in June 2020.

There was a positive net flow in deposits from NFCs, increasing by €1.5 billion in June. On an annual basis the growth rate of 14.9 per cent in June was less than May’s at 15.8 per cent.

Total bank lending to Irish-resident sectors declined by 4.2 per cent in the year, partly driven by a decline in lending to the private sector, which experienced a fall of 2 per cent.

Banks’ holdings of deposits from the Irish-resident private sector continued to record strong inflows, with annual growth at 13.6 per cent as at end-June. Irish-resident households remain the largest contributing sector to deposits on banks’ aggregate balance sheet.

Irish-resident banks’ outstanding borrowing from the Central Bank as part of Eurosystem monetary policy operations rose in June, and now stands at €24 billion.