Consumers save less and spend more as Covid restrictions ease

Irish household deposits declined in August, marking the first fall since November 2019. It came as the annual growth rate in deposits continued to moderate amid greater spending, new data from the Central Bank showed.

Withdrawals exceeded lodgements by €56 million, according to the figures, as Covid-19 restrictions eased. The annual growth rate in deposits fell to 10.9 per cent, down from a Covid-era high of 14 per cent.

The monthly statistics showed net lending to households increased by €77 million in August, in contrast with the same month in the previous year when repayments exceeded drawdowns by €74 million. On an annual basis, net lending rose by €479 million in August 2021, a 0.6 per cent increase.

Mortgages also rose, increasing by €24 million in net terms over the month and rising by 1 per cent on an annual basis. The monthly increase was in marked contrast to the same month in 2020, when the figures showed a negative figure of €97 million as the Covid-19 crisis continued.

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In general consumer lending, the trends remained positive with a net increase of €59 million. Over the year, however, consumer lending was 1.1 per cent, or €125 million, lower.

NFC loans

Net lending to non-financial corporations (NFCs) fell by €277 million in the month, while annual trends showed NFC loans were 3.5 per cent lower, with repayments exceeding drawdowns by €1.3 billion.

However, deposits from NFCs remained positive in August, with the net total rising by €868 million. Annual figures showed a 13.1 per cent rise, or growth of €8.9 billion.

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 was unchanged in August at €24 billion.