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ISEQ higher-Banks continue to shrink

Friday, February 01 09:20:39

The ISEQ is slightly higher this morning at 3,558, up 11 points as markets await today's US jobs data.

Davy Stockbrokers looks at the banks again and their continued deleveraging:

Central Bank statistics for December 2012 show little change in the recent key year-on-year (yoy) trends: credit was still contracting while deposits were ahead.

The contraction in household credit was broadly in line with a year earlier (3.9pc yoy versus 3.8pc), while the contraction in corporate credit is greater (3.6pc versus 1.6pc). On a more positive note, deposits are growing - a turnaround from the significant contraction being experienced a year earlier, while banks' reliance on monetary authorities continues to decline.

Central Bank statistics show that loans to households contracted by 3.9pc yoy at the end of December compared with a decline of 3.6pc yoy at the end of November.

Loans to corporates were down 3.6pc yoy compared with the end-November decline of 3.9pc. On the other hand, resident private sector deposits were up 2.5pc yoy compared with growth of 2.2pc at the end of Novemberand a yoy contraction of 7.3pc at the end of 2011. Irish banks' ECB reliance fell by E6.6bn in the month to finish the year at E71.4bn.

This includes E59.2bn in relation to 'domestic' banks and E48.7bn for covered banks.

The latter is down from E55.3bn at the end of November 2012 and E67.1bn at the end of 2011. Own use bonds still stood at E3bn at the end of the year, in line with the endNovember 2012 level according to Davy Stockbrokers.