Davy Research |
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Banks
April deposit trends were positive
01 June 2012
Emer Lang
FACTS: Central Bank statistics show a 4bn rise in Irish resident private sector deposits to 167.3bn in April while a separate deposit series for covered banks from the Department of Finance shows that balances (including overseas operations) rose by over 1% to 151bn.
ANALYSIS: Overall, Irish resident deposits were down by 3.4% year-on-year (yoy) at the end of April compared with the yoy decline of 4.3% at the end of March. In monetary terms, the total deposit base dipped from 267.3bn to 265.3bn in the month (319.5bn at end-April 2011) but it all related to 'monetary financial institutions' (MFIs). Resident private sector deposits rose to 167.3bn from 163.1bn in March. According to the Central Bank, deposits from the 'other financial institutions' (OFI) sector rose by almost 3.4bn during the month with covered institutions accounting for the majority of this increase. The latter's overall deposit base, including MFIs, stood at 184.4bn, compared with 186.9bn at the end of March. Again, the decline was related to MFIs. Covered banks' deposits from private sector Irish residents were 107.6bn in April versus 103.9bn in March (108.2bn at end-April 2011). Covered banks deposits from non-residents in the euro-zone were broadly flat at 2.7bn (versus 3.4bn a year ago) while deposits from RoW were lower at 60.2bn (63.9bn in March and 72.6bn a year ago).
Meanwhile, the Department of Finance monthly series on deposits at covered banks (includes overseas) shows that balances rose by over 1% to 151bn at end-April. On the credit front, contraction persists with loans to households down 4% yoy at the end of April, compared with -3.9% at the end of March, and loans to non-financial corporates (NFCs) down 1.8% yoy versus -2.2% in March. Loans to NFCs decreased by 326m in April, following an increase of 34m in March.
DAVY VIEW: The deposit trend up to the end of April is encouraging. This is particularly so in light of signs that banks are succeeding in nudging their deposit rates down as they strive to rebuild margins, one of the key prerequisites to restoring profitability in the medium term.