9/5/2014: Irish Credit Conditions Worsened in Q1 2014

Latest data on interest rates (covered here: http://trueeconomics.blogspot.ie/2014/05/952014-cost-of-credit-in-ireland-kept.html) and credit outstanding in the Irish banking system shows continued deleveraging in the economy:

At the end of Q1 2014,
-  Total volume of loans outstanding declined 5.6% y/y,
-  Loans to Households were down 1.54% y/y and
-  Loans to NFCs were down 9.29%.
-  Loans for house purchases were down EUR1.46bn,
-  Households' overdrafts rose EUR1.39bn, while
-  Consumer credit loans were down EUR1.43bn.
-  NFCs overdrafts fell EUR2.81bn and
-  Non-overdraft NFCs credit fell EUR5.2bn.

So credit available to enterprises and households in Ireland is still falling. More significantly, households are accumulating overdraft liabilities. And the cost of these facilities is rising.

Not a good sign, suggesting households and corporates are being squeezed on both ends of the debt deflation pump.

3/1/2013: Irish Private Sector Credit: November 2013

Central Bank of Ireland published series of data today covering deposits and credit in Irish banking system through November 2013. Here are the highlights.

Overall, household credit outstanding at the end of November 2013 stood at EUR107.763 billion, down EUR1.354 billion on October 2013 and up EUR2.547 billion on November 2012. Compared to November 2011, outstanding credit to Irish households is down EUR3.069 billion (-2.77%). On a more stable, 3mo average basis, Q4 2013 average credit outstanding was EUR2.886 billion ahead of the same period in 2012.

Monthly decline in overall credit supplied to Irish households can be broken down into a decline of EUR1.226 billion in loans for house purchase, EUR119 million decline in consumer credit and EUR9 million decline in other loans. In other words, monthly decline was broad across all three categories of household credit.

Year on year, credit to households fell EUR1.336 billion for consumer credit, and is down EUR110 million for credit extended via other loans. There was a rise of EUR4.680 million for loans for house purchase. However, this increase itself is fully accounted for by a massive EUR6.233 billion jump in credit for house purchase extended in just one month: December 2012. Since December 2012, however, credit remained slightly lower, averaging EUR 83.978 billion over 11 months of 2013 as compared to EUR84.973 billion back in December 2012.

In summary: house purchase loans are slightly down over the 12 months from December 2012 through November 2013, Consumer credit loans are down over the same period, and other loans are also down. In all three cases, declines were moderate, implying that over December 2012-November 2013, overall credit to Irish households declined from EUR111.076 billion to EUR107.763 billion.

Compared to H1 2008:

• Household credit overall was more than 30% down in November 2013 compared to H1 2008 average;
• Credit for house purchases was more than 32% down in November 2013 compared to H1 2008 average;
• Consumer credit was more than 39% down in November 2013 compared to H1 2008 average;
• Other loans were 139% up in November 2013 compared to H1 2008 average.

Non-financial corporations total credit outstanding in November 2013 stood at EUR81.129 billion, down EUR143 million on October 2013 and down EUR3.676 billion on November 2012. Q4 average stock of credit to non-financial companies in Ireland declined in Q4 2013 y/y by some EUR3.734 billion (-4.38%). Compared to November 2011, credit to NFCs in Ireland is down EUR7.225 billion (-8.18%). More than half of this drop took place over the last 12 months.

In summary: credit to NFCs extended in the Irish system is down y/y in November and over Q4 2013 overall and the rate of decline did not decline over the last 12 months, compared to previous 12 months.

Compared to H1 2008:

• Credit to NFCs overall was more than 50% down in November 2013 compared to H1 2008 average.

Next post will cover deposits and loan/deposit ratios.