Credit Conditions

Économiste Monétaire

Just looking through the Irish numbers in the Euro area bank lending survey at the moment, and I thought some people might be interested in the (reported) demand side for credit by businesses and households:



1 = decreased considerably; 2 = decreased somewhat; 3 = basically unchanged; 4 = increased somewhat; 5 = increased considerably.

Full Excel file available here.

silverharp

Are all the totals (total credit outstanding) decreasing in alsolute terms?

Économiste Monétaire

Total credit outstanding to households is falling in nominal terms; ditto for non-financial corporations.

Économiste Monétaire

Here's a graph for the last available figures:



Amounts in EUR Millions. (NFCs = non-financial corporations; H-Credit = Household Credit.)

Hasschu

http://1.bp.blogspot.com/_ngczZkrw340/S2LKFVa_xNI/AAAAAAAAQHI/oPxPOBpes9c/s1600-h/PNB+Paribas+REER.png

Surprised me.

silverharp

Économiste Monétaire wrote: »

Total credit outstanding to households is falling in nominal terms; ditto for non-financial corporations.

Thanks, I assume the fall is of the write down variety? The interesting question I guess is what the ultimate amount of debt default there will be.

Économiste Monétaire

Silverharp2 wrote: »

Thanks, I assume the fall is of the write down variety? The interesting question I guess is what the ultimate amount of debt default there will be.

According to the CB monthly statistics released today, there was a fall of €1.2bn in private-sector credit for December, which was predominately due to debt repayments > new borrowings. So there's a mix of valuation effects (write-downs) and simple deleveraging.

• Private-sector credit declined by almost €1.2 billion in December, with the majority of this decline due to underlying transactions. This follows the €2.5 billion fall in PSC in November, which was largely due to valuation effects (increased write-downs and bad debt provisions).
• The annual rate of change in headline PSC declined further in December, to minus 6 per cent. When all valuation effects are excluded, the underlying stock of PSC was 2.1 per cent lower in December 2009 compared with December 2008.
• Credit to non-financial corporations (NFCs), excluding valuation effects, fell by 3.2 per cent over 2009, and has been contracting on an annual basis since July 2009.
• Household credit, excluding valuation effects, was 1.5 per cent lower in December 2009 compared with December 2008. Residential mortgage lending outstanding (including securitised mortgages) declined by €19 million during December. At year-end 2009, residential mortgages outstanding were 0.3 per cent lower than at year-end 2008.

cavedave

Not exactly related but I thought this was an interesting comparison of the risk of various economies.



Private sector credit at 194% of gdp?

Économiste Monétaire

That figure seems correct. The stock of PSC was approx. €372.096bn at the end of '09.

ardmacha

A couple of things about this. The UK is quite a bit away from Ireland despite having a higher government deficit, higher accumulated public debt and high accumulated private debt. Presumably net external assets plays some role in this, but I am not quite sure how relevant this is. The table implies that the UK has a higher potential GDP growth rate than Ireland, I cannot see how this is justified. Ireland continues to have reasonably favourable demographics for potential growth.