Bank lending to Irish businesses and home owners fell in July for the fifth straight month, indicating that the economy has far to go before it will emerge from the sharpest downturn in the nation's history.
The Central Bank and Financial Services Authority of Ireland Monday said the total value of loans outstanding to the private sector fell by EUR3.7 billion from June, having fallen by EUR1.4 billion in that month. Much of the decline reflected write-downs of loans, although even without changes in the valuation of existing credits, lending fell on the month.
As a result, lending was down 2.2% from July 2008. In June, lending was down 0.7% from the corresponding month a year earlier, the first time an annualized fall has been recorded during the current financial crisis. In the boom years running up to the start of the global credit crunch in late 2007, the annual rate of growth in loans to the private sector regularly exceeded 20%.
The decline in outstanding credit during July was largely due to a EUR2.1 billion drop in the value of loans to non-financial corporations. Much of that reflected write-downs, although the underlying stock of loans also fell.
Loans outstanding to households fell by EUR404 million, with mortgage loans down EUR71 million, the fourth straight month of decline.
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