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Ireland’s banking sector: Facts & Figures

Updated December 2021 – For earlier editions of Facts & Figures click here

Ireland’s economy posted another solid performance in 2020, despite the difficult circumstances posed by the UK’s departure from the European Union (Brexit) and the Covid-19 pandemic, with gross domestic product (GDP) up 5.9% year-on-year in volume terms. However, there was a clear split between the domestic economy where personal consumption fell by 10.4% year on year and international trade, where exports rose by 9.5%.

Unemployment rose from 4.5% by Q4 2019 to 5.7% a year later but gross household savings jumped from 12.2% in 2019 to 23.7% in 2020.

There were 53 banks operating in Ireland at the end of 2020. These included 25 credit institutions authorised in Ireland (of which five were covered bond banks) and 28 branches of banks authorised in other European Economic Area countries that were operating in Ireland. Seventeen 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 fallen slightly in recent years, the number of credit unions – not-for-profit, member-owned financial cooperatives funded primarily by member deposits – fell from 243 to 229 between September 2019 and September 2020 as credit unions consolidated.

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 in one (14% in Bank of Ireland). The five main banks operated 634 branches and almost 2,400 ATMs for cash withdrawal nationwide by the end of 2020. Independent companies have increased their ATM fleets in Ireland in recent years and accounted for an estimated 30% of ATMs in Ireland by the end of 2020.

Card payment volumes rose by 5.8% in 2020 to more than 1.3 billion even though many business premises were forced to close for long periods to limit the spread of Covid-19. The restrictions encouraged more people to shop online, with the value of online card payments up by 25% year on year. At the point of sale, contactless payments became more popular, with the value of contactless payments up by 50% year on year. However, the value of cash withdrawals at ATMs fell by 32.5% year on year to less than €13.3 billion.

The number of cheque payments halved between 2016 and 2020 to about 23 million. The number of online and mobile banking payments grew by 67% over the same period to 118 million.

BPFI research shows that new residential mortgage lending fell by 12% year-on-year to about €8.4 billion, including €1.2 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 53% of the number and value of mortgage drawdowns in 2020. Some lenders provide discounted fixed interest rates on mortgages secured on residential properties with higher energy efficiency ratings.

Gross new lending to non-financial small and medium-sized enterprises (SMEs), excluding financial intermediation, fell from €5.4 billion in 2019 to €4.1 billion in 2020, according to the Central Bank of Ireland. Repayments by SMEs exceeded drawdowns by €1.4 million in 2020. Annual lending to hotels and restaurants fell to its lowest level since 2013, while lending to the wholesale and retail trade fell for the third year in succession.

The government-owned Strategic Banking Corporation of Ireland (SBCI) provides wholesale funding to banks and non-bank financial institutions for on-lending to SMEs. During 2020, it supported some €0.8 billion in lending, through loans to SMEs or risk-sharing schemes, including credit products to support customers affected by Covid-19 and Brexit.

Lenders, through BPFI, had put in place payment breaks on about 151,000 residential mortgage, consumer credit and SME lending accounts by the time applications closed at the end of September.

Some €19.7 billion of the €37.3 billion loans outstanding to Irish resident private-sector enterprises (excluding financial intermediation) was outstanding to SMEs at the end of 2020. Housing loans of €73.8 billion were on the balance sheets of credit institutions, with a further €16.8 billion in securitised loans. When non-banks are included the value of mortgage debt outstanding contracted by 1.6% in 2020 to €113.3 billion. Non-mortgage personal credit outstanding fell by 4.4% year on year to €12.2 billion by the end of 2020.

The growth in credit institution deposits accelerated in 2020 with private household deposits increasing by 12.7% year-on-year to €117.3 billion at the end of 2020, and deposits of Irish resident private-sector enterprises (excluding financial intermediation) jumping to almost €80 billion to about €68 billion. Much of the growth came from overnight deposits, with household current account balances increasing by 18.3% during 2020 to €47.6 billion.

An Post, the State-owned postal service operator, managed a further €22.7 billion in national savings schemes and post office savings accounts on behalf of the national treasury.

Resident credit institutions in Ireland, including credit unions, employed almost 26,300 people at the end of 2020, the fewest since the data series began in 1999, according to the European Central Bank. 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 €0.2 billion in corporation tax.  Since 2014, banks have also paid an annual levy of about €150 million.

Gross value added (GVA) by the banking sector was estimated at €6.1 billion in 2018, according to the Central Statistics Office. Resident banks reported combined losses after interest and tax of almost €1.5 billion in 2020 compared with profits of €2.5 billion in 2019.

Ireland’s exports of financial services (excluding insurance and pension services) rose by 2.1% in 2020, to €17.2 billion. Ireland was also the eighth largest exporter of financial services in the world in 2019, according to UNCTAD.

Total credit institution balance sheet assets rose to more than €756 billion at the end of 2020, the highest level since September 2013, mainly reflecting an increase of €104 billion in loans outstanding to euro area non-residents over the same period. In terms of liabilities, deposits from Irish private-sector residents remained the key source of funding and increased by €36 billion during 2020.

Contributor: Anthony O’Brien anthony.obrien@bpfi.ie