Loans to households and business continued to decline last month, according to new statistics from the Central Bank.

Household loan repayments exceeded drawdowns by €856 million in January, as loans for house purchases continued its decline, falling by €416 million.

This followed on from a net monthly decrease of €143 million in household loans in December.

Looking at the figures on an annual basis, lending to households fell by 4.1 per cent in January, unchanged from December. Loans for house purchase, which account for 78 per cent of total household loans declined at an annual rate of 3 per cent, the figures show.

Private-sector deposits rose by 6.9 per cent over the 12 months, following annual rises of 8.5 per cent and 8.4 per cent in November and December.

In January there was a €623 million decline in resident private-sector deposits, which was attributed to a fall in deposits from other financial intermediaries .

Non-financial corporate deposits also declined, by €470million over the month.

Credit institutions borrowings from the Central Bank was down by €1.9 billion last month. The outstanding stock of borrowings is €37.1 billion, of which domestic banks accounted for €29.8 billion, the lowest level of reliance on Central Bank funding since August 2008.

“The credit data remain the most disappointing as regards Ireland’s recovery story,” said said Alan McQuaid, an economist at Merrion Stockbrokers.

“Although there has been some improvement in recent months in terms of bank lending, progress is still very slow. Advancing credit to the SME sector in particular is essential if the Irish economy and labour market is to fully recover. But even lending to the household sector leaves a lot to be desired. “

“Unless this situation is addressed, Irish GDP growth over the next few years will remain well below its potential,” he added.