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Ireland’s banking sector: Facts & Figures

Updated December 2020 – For earlier editions of Facts & Figures click here

Ireland’s economy posted another solid performance in 2019 with gross domestic product (GDP) up 5.6% year-on-year in terms of volume. Personal consumption rose by 3.2% and government expenditure by 6.3%. Investment and import figures are distorted, among other things, by the relocation of intellectual property (IP) to Ireland in association with external contract manufacturing activity attributable to Ireland.

Ireland’s current account swung from a surplus of €19.6 billion in 2018 to a deficit of €40.4 billion in 2019, mainly due to large imports of IP. Ireland’s exports of financial services fell by 9.9% in 2019, to €16.9 billion.

Unemployment also continued to fall, with the rate dropping to 4.5% by Q4 2019, down from 5.4% a year earlier. Gross household savings increased by 12.1% in 2019 to almost €14.5 billion and the gross saving ratio increased to 12.2%.

There were 58 banks operating in Ireland at the end of 2019. These included 24 credit institutions authorised in Ireland (of which five were covered bond banks), 32 branches of banks authorised in other European Economic Area countries that were operating in Ireland. Eighteen of the credit institutions 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 252 to 241 between September 2018 and September 2019 as credit unions consolidated. Most credit unions have assets of less than €100 million. However, the number of credit unions with less than €40 million in assets dropped to 103 in September 2019, down from 285 in September 2013.

The Irish government has majority stakes in two banking groups (a 71% stake in Allied Irish Banks and 75% in permanent tsb) and a minority stake (14% in Bank of Ireland). The five main banks operated 648 branches and almost 2,900 ATMs for cash withdrawal nationwide by the end of 2019. Independent companies have increased their ATM fleets in Ireland in recent years.

Card payments continued to grow strongly, driven by debit cards for which volumes grew by 18.3% in 2019 to more than 1.1 billion. The expansion of contactless card payments has helped to reduce consumers’ dependence on cash. Contactless payment volumes grew by 40% in 2019 and accounted for about 40% of total card payment volumes.

Ireland is one of only a handful of countries worldwide where cheques are still regularly used, however cheque usage has fallen sharply in recent years: Irish cheque usage per capita was down from 22.1 in 2009 to 6.4 in 2019.

Some 73% of Internet users engaged in Internet banking in 2019, according to the CSO.

Outstanding credit institution loan balances have declined in recent years as both businesses and consumers have deleveraged, but gross new lending grew in 2019.

BPFI research shows that new residential mortgage lending rose by 9% year-on-year to €9.5 billion, including €1.3 billion of re-mortgaging with a new lender or switching. The first-time buyer (FTB) market has been accounting for most of the activity in the mortgage market in recent years. FTBs accounted for around 51% of the total value of mortgage drawdowns in 2019 compared to just over 21% in 2006 when mortgage drawdown activity was at its peak. Some banks provide discounted fixed interest rates on mortgages secured on residential properties with higher energy efficiency ratings, based on the national Building Energy Rating. The availability of the discounted rates varies depending on the bank.

Gross new lending to non-financial small and medium-sized enterprises (SMEs), excluding financial intermediation, rose by 1% year-on-year to €5.4 billion during 2019, according to the Central Bank of Ireland. Net lending to SMEs (drawdowns less repayments) declined by €759 million over 2019.

The government-owned Strategic Banking Corporation of Ireland provides wholesale funding to banks and non-bank financial institutions for on-lending to SMEs. By the end of 2019, it had supported some €1.4 billion in lending, including almost €1 billion in SBCI-funded loans to SMEs and €0.4 billion in SBCI risk-sharing schemes.

Some €21.4 billion of the €40.1 billion loans outstanding to Irish resident private-sector enterprises (excluding financial intermediation) was outstanding to SMEs at the end of 2019. Housing loans of €76.5 billion were on the balance sheets of credit institutions, with a further €16.3 billion in securitised loans. When non-banks are included, the value of mortgage debt outstanding fell from €117.6 billion to €115.1 billion in 2019.

Non-mortgage personal credit outstanding increased to €14.4 billion by the end of 2019, from €14 billion a year earlier.

Credit institution deposits grew strongly, with private household deposits increasing by 6.1% year-on-year to €104.1 billion at the end of 2019, and deposits of Irish resident private-sector enterprises (excluding financial intermediation) jumping from €58 billion to almost €68 billion. Much of the growth in deposits came from overnight deposits, with household current account balances increasing from €34 billion to €38.5 billion during 2019.

An Post, the State-owned postal service operator, managed a further €21.2 billion in national savings schemes and post office savings accounts on behalf of the national treasury.

Credit institutions in Ireland, including credit unions, employed almost 27,700 people at the end of 2019. Banks paid some €2.9 billion in wages and salaries in 2019, of which banks mainly active in international markets paid more than €0.8 billion. Banks also paid some €0.5 billion in corporation tax.  Since 2014, banks have also paid an annual levy of about €150 million. By 2021, banks will have paid €1.2 billion in such levies.

Banks in Ireland have made significant progress in reducing non-performing loan (NPL) ratios. According to EBA data, the NPL ratio was 3.3% as of December 2019, down from 5.8% and 10.5% in December 2018 and December 2017, respectively.

Gross value added (GVA) by the banking sector was estimated at €5.3 billion in 2017, according to the Central Statistics Office. Profit after interest and tax fell from €3.8 billion in 2018 to €2.5 billion in 2019. Ireland was also the eighth largest exporter of financial services (excluding insurance and pension services) in the world in 2019, according to UNCTAD.

Total credit institution balance sheet assets rose to more than €675 billion at the end of 2019, the highest level since March 2015, mainly reflecting an increase of €43 billion in loans outstanding to non-residents. In terms of liabilities, deposits from Irish private-sector residents remain a key source of funding and increased by €25 billion during 2019.

Contributor: Anthony O’Brien