LENDING TO companies and households continued to decline in October, falling €2.3 billion compared to September, figures from the Central Bank showed yesterday.
The fall in October to €375.8 billion follows a €4.4 billion decline the previous month.
The Central Bank said the latest drop was due mainly to valuation effects such as a stronger euro, writedowns of loans and increased provisions for bad debts.
The underlying stock of credit was relatively unchanged on a monthly basis when valuation effects were set aside, it said.
On an annual basis, private-sector credit fell by €13.5 billion, or 3.7 per cent, in the year to the end of October 2009. The Central Bank blamed valuation effects for 90 per cent of the annual decline.
Credit extended specifically to companies dipped 1.2 per cent during the month and 9 per cent on an annual basis.
“Adjusting for valuation effects, approximately one-tenth of this decline can be attributed to a reduction in the underlying stock of credit to NFCs [non-financial corporations], as a result of repayments exceeding drawdowns during the month,” the bank said.
Residential mortgage lending also fell in October, marking a seventh consecutive month of decline. Mortgages outstanding at the end of October came to €147.8 billion.
Non-housing-related household credit further declined during October, falling 18 per cent on an annual basis.
The figures showed outstanding debt on personal credit cards was unchanged on a year-to-year basis in October. However, the average debt per personal card had risen 1.8 per cent in the year to the end of October, while the number of personal credit cards in use fell.
The data showed the level of debt on the cards decreased slightly during the month, marking the eighth month this year where repayments have exceeded new spending.
Ireland’s monetary financial institutions accounted for €208 billion of the euro area’s broad money supply in October. The broad money supply grew 6 per cent in the year to the end of October – the largest annual increase since January 2008.
The Central Bank said the value of debt securities with maturity dates of up to two years issued by Irish credit institutions in October fell by €158 million, while holdings of debt securities issued by euro-area monetary financial institutions showed a fall of €1.7 billion.
