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Ireland’s banking sector: Facts & Figures

Updated September 2018 – For earlier editions of Facts & Figures click here

Figures provided in the country-by-country overview may not match those presented in the statistical annex due to the sources used i.e. National Central Banks and European Central Bank.

Gross domestic product rose by 7.8% year-on-year in volume terms. However, personal consumption and international trade were the key drivers as investment fell. Total domestic demand fell by 7.9% year-on-year in 2017 driven by a 23% growth in capital formation (mainly related to lower imports of intellectual property products [IPP]) and a 1.9% rise in personal consumption. Modified total domestic demand, which removes globalisation effects such as IPP imports, rose by 3.7%.

Ireland’s current account surplus more than quadrupled in 2017, driven mainly by a 14.3% rise in services’ exports. Ireland’s exports of financial services grew by 22.1% to €14.5 billion. Ireland was the world’s seventh largest exporter of financial and insurance services in 2016, according to UNCTAD.

Unemployment also continued to fall, with the rate dropping to 6.4% by Q4 2017. The gross saving ratio of households (saving as a percentage of total disposable income) increased from 6.8% in 2016 to 8.6% in 2017, partly reflecting continued deleveraging in the Irish economy.

There were 58 banks operating in Ireland at the end of 2017. These included 24 credit institutions authorised in Ireland (of which five were covered bond banks) and 34 branches of foreign banks operating in Ireland. 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 292 to 269 during 2017 as credit unions consolidated.

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 3,400 ATMs for cash withdrawal nationwide.

Card payments grew strongly in 2017, as consumers switched from cash to cards, especially debit cards on which volumes grew by 22% in 2017 to about 765 million. The expansion of contactless card payments has helped to reduce consumers’ dependence on cash. By the last quarter of 2017, contactless accounted for 28% of the volume and almost 7% of the value of card payments.

Some 71% of households used Internet banking in 2017, according to the Central Statistics Office. About one in three credit transfers in the second half of 2017 were initiated via digital banking (online or mobile banking).

Outstanding credit institution loan balances have declined in recent years as both businesses and consumers have deleveraged, but gross new lending grew in 2017: new residential mortgage lending rose by 29% year-on-year to €7.3 billion, of which €0.7 billion was re-mortgaging with a new lender or switching.

New lending to non-financial small and medium-sized enterprises (SMEs) rose by almost 10% year-on-year. Gross new drawdowns to core SMEs (excluding financial intermediation and property-related sectors) rose by 14% year-on-year to €3.7 billion during 2017. A further €1.35 billion in gross new lending was drawn down by SMEs in property-related sectors. The government-owned Strategic Banking Corporation of Ireland provides wholesale funding to banks and non-bank financial institutions for on-lending to SMEs. During 2017, it supported some €0.9 billion in lending. SBCI shared the lending risk with other lenders on €142 million of those loans.

Some €26.2 billion of the €42.8 billion loans outstanding to Irish resident private-sector enterprises (excluding financial intermediation) was outstanding to SMEs at the end of 2017. Housing loans of €74.8 billion were on the balance sheets of credit institutions, with a further €27.3 billion in securitised loans.

Non-mortgage consumer credit outstanding continued to recover in 2017, increasing to €13.5 billion by the year end, up from €12.8 billion a year earlier. The Central Bank of Ireland estimated that credit unions maintained a roughly one-third share of consumer credit.

Credit institution deposits also grew, with private household deposits at almost €94 billion at the end of 2017, up 3.1% year-on-year, and deposits of Irish resident private-sector enterprises (excluding financial intermediation) up by 8% to €55.9 billion.

An Post, the State-owned postal service operator, managed a further €20.4 billion in national savings schemes and post office savings accounts, up from €20.1 billion a year earlier.

Credit institutions in Ireland employed an estimated 26,300 people at the end of 2017. Banks and building societies paid some €2.4 billion in wages and salaries in 2017, of which banks, focussed on international markets, contributed €0.6 billion. They 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.

Gross value added (GVA) by the banking sector was estimated at €6 billion in 2015, according to the Central Statistics Office. Profit after interest and tax rose from €2.2 billion in 2016 to €3.3 billion in 2017.

Total balance sheet assets fell to €552 billion, their lowest level since the data series began in 2003, reflecting continued contraction in loans outstanding, although loans to the Irish resident private sector increased for the first time since 2007. In terms of liabilities, non-monetary financial institution deposits from Irish residents have become a key source of funding. They represented 35% of liabilities at the end of 2017, almost three times the ratio in 2008.

Contributor: Anthony O’Brien

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