Biggest growth in consumer lending in over 10 years; Central Bank
New lending for car purchase in the year to July reached its highest level since the Central Bank started measuring the indicator in 2012.

According to the regulator’s figures, gross new lending for car purchase hit €2.1 billion in the twelve month period.

Arrangements other than personal contract plans accounted for much of the increase.

Overall consumer lending in the year to July registered its largest annual increase since since late 2008.

The Central Bank’s figures show that net consumer lending reached €737 million in the 12 months.

The regulator reported 2% annual growth in all bank loans to households in the period.

It amounted to a net increase in household lending of €1.8 billion.

New mortgage drawdowns continued to exceed repayments by €47 million in July.

In annual terms, on-balance sheet mortgage lending increased by €1.1 billion, or 1.5%.

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Euro zone lending continues to grow but money supply slows

Euro zone lending continued to grow at a steady pace in June while a money supply indicator, which often foreshadows future activity, lost pace, data from the European Central Bank showed today.

Household lending expanded by 3.3%, keeping a steady growth pace for the fifth month in a row, and corporate lending grew by 3.8%, in line with May.

This suggested that the recent economic slowdown has yet to significantly dent bank lending.

But with economic growth slowing sharply this year on weak export demand for manufactured goods, the ECB has already flagged more policy easing and the only question is whether it pulls the trigger at tomorrow’s policy meeting or wait until September.

While market expectations for policy action are split, some point out that the economy has appeared to stabilise with confidence indicators steadying, unemployment still falling and the ECB’s own lending survey pointing to modest but steady activity ahead.

The annual growth rate of the M3 measure of money supply, which often foreshadows future activity, grew by 4.5% in June after 4.8% in May, trailing forecasts for 4.7%.

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90.3% of new SME lending from top three lenders – Central Bank report

A new report on lending to small and medium sized businesses (SMEs) shows that credit demand remains low, while over 90% of new lending comes from the main three lenders here – AIB, Bank of Ireland and Ulster Bank.

The Central Bank’s SME Market Report for 2019 also shows that working capital remains the most common reason for credit applications among micro and small firms.

It also noted that credit for growth and expansion is more common among medium firms.

Today’s SME Market Report also found that rejection rates on bank finance applications have stabilised.

Today’s report found that gross new lending to SMEs declined 1.7% on the back of lower lending to the manufacturing, wholesale, retail, trade and repairs and primary industries sectors.

It said that credit demand remains low compared to previous years with just 20% of SMEs applying for credit in the months from April to September 2018.

Irish SMEs are also more reliant on leasing and hire purchase for investment activities than the EU average but are less reliant on bank loans, the Central Bank said.

It also found that interest rates on small loans in Ireland average about 5.7% – much higher than similar size loans in Europe where interest rates average 2.5%.

The Central Bank said that SME default rates have declined from 19.8% in December 2017 to 17.5% in June of last year.

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