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Ireland’s banking sector: Facts & Figures

Ireland’s economy posted another strong performance in 2016 with gross domestic product per capita rising to €56,800. Economic activity increased with total domestic demand rising by 16.8% year-on-year driven by 46% growth in capital formation and a 3% rise in personal consumption. Unemployment also continued to fall, with the rate dropping to 6.7% by Q4 2016.

Ireland’s current account surplus fell in 2016 mainly due to a sharp rise in research and development service imports and a drop in merchandise exports. However, exports were some 67% higher in 2016 than in 2012. Ireland’s exports of financial services grew by 2.5% to €11.3 billion. Ireland was the world’s ninth largest exporter of financial services (UNCTAD, 2015).

Gross household saving increased by 11.7% to €11.7 billion, as income grew more than expenditure. The gross saving ratio of households increased from 10.7% in 2015 to 11.5% in 2016 partly reflecting continued deleveraging in the Irish economy.

There were 52 banks in Ireland at the end of 2016. These included 25 credit institutions authorised in Ireland (of which five were covered bond banks), 26 branches of banks and two branches of building societies authorised in other EEA countries and one non-EAA branch. Twenty of the 52 banks and building societies were headquartered in Ireland or had more than 20% of their business with domestic customers. While the number of banks has been relatively stable in recent years, the number of credit unions – not-for-profit, member-owned financial cooperatives funded primarily by member deposits – fell from 333 to 290 during 2016.

The Irish government has majority stakes in two banking groups (Allied Irish Banks and permanent tsb) and a minority stake in another (Bank of Ireland). The five main banks operate some 680 branches and 3,500 ATMs for cash withdrawal nationwide.

Card payments grew strongly in 2016 and accounted for an estimated 28% of point-of-sale payments, as consumer switched from cash to cards. The expansion of contactless card payments has helped to reduce consumers’ dependence on cash and almost 14% of card payments in 2016 were contactless.

Some 64% of households used Internet banking in 2016, according to the Central Statistics Office.

Outstanding credit institution loan balances have declined in recent years as both businesses and consumers have deleveraged, but gross new lending grew in 2016: new residential mortgage lending rose by 16% year-on-year to €5.7 billion, while new lending to non-financial small and medium-sized enterprises (SMEs) rose by more than 20% for the second successive year as gross new drawdowns rose by 35% year-on-year to €4.6 billion during 2016. In 2015, the government launched the Strategic Banking Corporation of Ireland to provide wholesale funding to banks and non-banks for on-lending to SMEs. By the end of 2016, it had supported some €0.5 billion in lending.

Almost €28 billion of the €44.2 billion loans outstanding to Irish resident private-sector enterprises (excluding financial intermediation) was outstanding to SMEs. Housing loans of €73.5 billion were on the balance sheets of credit institutions, with a further €33.3 billion in securitised loans.

Non-mortgage consumer credit outstanding rose in 2016 for the first time since 2009. The Central Bank of Ireland estimated that credit unions maintained a roughly 34% share of consumer credit throughout that period.

Credit institution deposits also grew, with private household deposits at almost €91 billion at the end of 2016, up 1.9% year-on-year, and deposits of Irish resident private-sector enterprises (excluding financial intermediation) up by 8.6% to €51.8 billion.

An Post, the State-owned postal service operator, managed a further €20.1 billion in national savings schemes and post office savings accounts.

Credit institutions in Ireland employed some 27,100 people at the end of 2015. Banks and building societies paid some €2.3 billion in wages and salaries in 2016. They also paid more than €0.7 billion in corporation tax, up 24% on 2015. Overall banking and related activities paid almost €1.8 billion in corporation tax, VAT and employment-related taxes. Since 2014, banks have also paid an annual levy of €150 million. By 2021, banks will have paid €1.2 billion in such levies.

Gross value added (GVA) by the banking sector was estimated at €5.2 billion in 2014, equivalent to 4.1% of total GVA by businesses (excluding agriculture) in Ireland, according to the Central Statistics Office. Profit after interest and tax fell to €2.2 billion in 2016, from €4.7 billion in 2015.

Total balance sheet assets fell to €590 billion, their lowest level since 2003, reflecting continued contraction in loans outstanding and securities holdings, although loans to non-residents and holdings of securities issued by non-residents have both increased since 2003. In terms of liabilities, private-sector deposits from Irish residents were 64% higher than in 2003 while capital and reserves were almost 1.5 times their 2003 level.