The Financial Sector in Ireland's National Accounts 2016 - Thematic Research Publication

Source publication: Institutional Sector Accounts Non-financial and Financial 2016

Get the data: StatBank

Source publication: Institutional Sector Accounts Non-financial and Financial 2016

Get the data: StatBank

The most significant asset positions are the Loans (AF.4), Deposits (AF.2) and Securities (AF.3). The size of the balance sheet has contracted consistently since 2008. In 2008, total financial assets of this sector stood at €1,452bn. In 2016 this value had fallen to €570bn. Total liabilities are also decreased from €1,446bn in 2008 to €592bn in 2016. Much of this contraction in liabilities can be attributed to the steady decline in deposits, falling from €1,102bn in 2008 to 394bn in 2016. Debt Security liabilities declined as well by 75% in this period.

Source publication: Macroeconomic Scoreboard 2016

Get the data: StatBank

The relative share of the Equity as a percentage of the total liabilities grew from 3.1% in 2008 to 10.7% in 2011 and to 17.6% in 2016. This was due primarily to the reduction in total liabilities. Figure 3.3 shows that currently Ireland's banks meet the regulations stipulated in the 2013 Basel 3 norms (PDF).

Source publication: Business in Ireland 2015

Get the data: StatBank

From 2007-2016 the value of interest linked to Securities has been consistently less than the interest arising from Loans and Deposits. Over the period there has been a decrease in both the interest payable and receivable, reducing at similar rates, while the net interest income has remained positive.

In 2008, banks received €16.8bn interest from Securities and €56.7bn from Loans and Deposits. On the other side of the balance sheet interest payable on Securities was €11.5bn and payable interest on Loans and Deposits was €52.6bn. In 2016 interest received from Securities decreased to €2.1bn while interest received from Loans and Deposits decreased to €6.4bn. The interest payable on Securities decreased to €1bn while interest payable on Loans and Deposits decreased to €2.6bn.

The net interest income fell from €9.5bn in 2008 to €5bn in 2016.

Source publication: Business in Ireland 2015

Get the data: StatBank

Source publication: Business in Ireland 2015

Get the data: StatBank

Figure 3.6 shows the share of interest received from Securities and Loans and Deposits by residency of the bank. Domestic banks receive most of their interest from Loans and Deposits. The share from Securities in domestic banks increased to a high of 34% in 2012 and gradually decreased thereafter.

In contrast, the international banks operating in Ireland had almost half of their interest generated by Securities. This contribution decreased to 31% in 2012 and since then has recovered to 2008/2009 levels.

Source publication: Business in Ireland 2015

Figure 3.7 shows personnel costs broken down by international and domestic banks. The personnel costs of international banks have remained relatively stable over the period under consideration, at about €500m. Personnel costs in domestic banks varied considerably over the same period. There was a steep decline from €2.2bn in 2012 to €1.5bn in 2013. In the 2013-2016 period total personnel costs increased but are still lower than their 2008 levels.

Source publication: Business in Ireland 2015

Get the data: StatBank

Figure 3.8 above shows the trend in interest margin separated by domestic and international banks. Interest margin is the gap between interest receivable and interest payable. The interest margin for all banks declined from 2008 to 2013, rose slightly in 2014 and has remained around that level since. For domestic banks, the margin is consistently higher than that of international banks. The margin of both domestic and international banks followed the same overall trend, but with a slight divergence in 2011. The margin for international banks was, on average, €3.2bn lower than that of domestic banks.

Source publication: Business in Ireland 2015

Get the data: StatBank

Profits decreased in 2009, before experiencing a slight increase in the years 2010 and 2011. From 2012 onwards however, the numbers declined again, to a level lower than that of 2009 but have remained stable since.

In 2008, the value of production of €14.1bn consisted of profit linked to Securities (€5.4bn), profit linked to Loans and Deposits (€4.2bn) and Other Income (€4.6bn). Other Income consists of commissions receivable and other operating income

After a decrease in 2009, the value of production increased to €11.8bn in 2011, mostly due to an increase in Other Income to €6.1bn. In 2012 the value of production fell to €8.4bn and has stayed stable around this level.

^{Note: This calculation does not deal with financial interest services indirectly measured (FISIM), for more see FISIM Information Note (PDF 537KB)}

Source publication: Business in Ireland 2015

Get the data: StatBank

The trend-line in the figure above indicates the gross operating surplus for all banks. Gross operating surplus is value of production minus the total costs, including personnel costs.

Figure 3.10 shows that even though the interest receivable has declined markedly from 2008 to 2016, the gross operating surplus was comparably stable due to interest payable declining in a similar fashion to interest receivable.

Interest receivable and interest payable comprise of the majority of income and expenditure respectively, while other costs and income are relatively small in comparison. In 2008 the gross operating surplus was €7.2bn, it declined sharply in 2009 and has declined gradually since, with the value being €2.9bn in 2016.

Source publication: Business in Ireland 2015

Get the data: StatBank

Domestic banks generated proportionately more operating surplus between 2008 and 2011 than their international counterparts. Since then they experienced a sharp decrease in their gross operating surplus from 2011 to 2012. In 2012 international banks increased their surplus to €1.6bn and have maintained that level. 

Source publication: Business in Ireland 2015

Get the data: StatBank

Value added by this sector showed a decline of €3bn between 2008 and 2009 and since then has not returned to the 2008 levels. Value added by domestic banks has been consistently higher than value added by international banks. However, since 2012 the gap between the contribution of domestic and international banks has decreased. In 2016 total value added by this sector was €5.3bn which is almost half of the 2008 level. Out of this, €3.1bn was contributed by domestic banks and €2.2bn by international banks.

The difference in value added by the S.122 sector from National Accounts can be attributed to FISIM. More information on FISIM can be obtained from the information note here (PDF 537KB)

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