Wednesday, March 2, 2011

02/02/2011: Credit and Deposits of Irish residents: January 2011



Let's get back to the credit stats released yesterday by the CBofI. This is the second post (earlier post - here - focused on foreign depositors flight), so let's update the core charts and review some monthly changes in the data.

Credit side:

  • Irish households credit contracted mom by €948mln in January 2011 (a drop of 0.73%) against a monthly contraction of 5.29% in December 2010 - so deleveraging has slowed down
  • Year on year, Irish households total outstanding debt fell to €129,370 mln in January 2011 or yoy decline of €10,392mln (7.44%) while in December yoy decline was 6.97%.
  • Irish household's outstanding mortgages amounted to €99,289mln, down in January by €289mln (-0.29%) against a monthly drop of 7.05% in December 2010
  • Year on year, mortgages were down 9.78% (or €10,766mln) in January against a yoy decline of 9.65% in December 2010.
  • Non-financial corporations outstanding debts amounted to €92,652mln in January up 0.1% mom (+€90mln), but down 35.67% yoy (-€51,363mln).
  • Total private sector credit fell 0.57% (-€1,908mln) mom in January (December 2010 saw mom decline of 0.98%) and fell 10.6% yoy (-€39,427mln) in January (December 2010 saw yoy decline of 10.73%).
So on credit side by category:
And growth rates:

Next, deposits for Irish residents (remember - non-resident deposits were highlighted in the previous post linked at the top):

  • Total private deposits down 0.82% mom (-€1,387 mln) in January and yoy down 9.05% (-€16,613 mln). Steep. Deposits were down 2.24% mom in December 2010 (8.41% yoy).
  • Households deposits contracted 0.7% mom in January (-€663mln) and 5.56% yoy (-€5,531mln). There go our 'savings rates', folks. In December 2010, yoy drop was 4.57% so things are accelerating downward. Month on month deposits were down 0.71% in December 2010.
  • Non-financial corporations deposits rose 0.12% (VAT carry overs and seasonal receipts and payments, especially for MNCs being most likely drivers) month on month (+€41mln), but were down 16.57% yoy (-€6,670mln). In December 2010 corporate deposits were down 4.93% mom and 17.42% yoy.

Now, let's consider the degree of leverage we carry in this economy:
As charts above show:
  • Leverage rose 0.26% mom and fell 1.7% yoy in January 2011 across the entire economy. In December, leverage rose 0.51% mom and fell 3.44% yoy
  • Overall leverage trend is up and currently this economy is leverage 199.32%
  • For households, leverage fell 0.03% mom and 1.99% yoy in January 2011, having fallen 0.04% mom and 2.79% in December 2010. So deleveraginng is slowing down
  • Currently Irish households are leveraged 137.69%
  • Non-financial corporations leverage was formidable 275.93% in January, down 0.02% on December 2010 and 1.99% on January 2010. In December 2010 corporate leverage was down 0.04% mom and 2.79% yoy. So deleveraging is slowing down for corporates as well.
Deposits composition by maturity:
Clearly, longer maturity has fallen off the cliff and a slight bounce in longer maturities this month follows a catastrophic drop off in months before. This cliff is a clear indication that households are moving cash into shorter maturities - either to withdraw deposits all together or as a form of short term precautionary savings. So:
  • Overnight deposits were down -0.9% (-€788mln) mom and -4.42% yoy (-€3,998mln) in January
  • Deposits with maturity up to 3 months were down -1.26% (-€197mln) mom and -6.16% (-€1,011mln) yoy in January 2011
  • Deposits with maturity up to 2 years were up 1.15% (+€780mln) mom and down -16.67% (-13,374mln) yoy.

Finally, credit cards debt fell 1.84% mom (€53.48mln) and -5.8% (-€175.81mln) yoy in January 2011. Good news for one of the most expensive forms of debt.
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