The pandemic will disrupt mortgage and consumer lending in the short-term but these will ultimately recover by 2023, says GlobalData, a leading data and analytics company.

GlobalData’s forecasts for the sector see total consumer loans declining by 2.8% in 2020, athough that is slower negative growth than the -3% previously forecast. Similarly, it is expected to grow by 3.1% in 2023, compared to -2.2% in the pre-COVID-19 forecasts. Mortgage loans will follow a similar pattern, athough the forecasted reduction of 4.6% in 2020 is sharper than the -4.2% previously predicted. However, it will also recover more quickly in the post-COVID-19 forecast and is expected to see 1.3% growth in 2023, compared to -3.2% beforehand.

GlobalData’s retail banking analyst, Resham Karira, commented: “Loan growth is expected to suffer in the short-term, as customers become more cautious about taking on additional liabilities due to economic uncertainty. Banks are increasingly promoting their digital channels, which is expected to boost the adoption of digital banking among Irish consumers.”

GlobalData expects that banks could see a rise in the delinquency rates, as retail customers and consumers are particularly vulnerable. However, support measures taken by the government will insure the banks are capable of withstanding the disruption.

Karira continues: “Even with the COVID-19 Pandemic Unemployment Scheme in place, there will be a deterioration in household finances, resulting in a reduced ability to save. This will be mitigated somewhat by a drop-off in consumption both during the crisis, as the lockdown prevents spending, but also into the months of recession, when poor consumer confidence will see weaker-than-normal spending.”

Information based on GlobalData’s report: Covid-19 Sector Impact: Retail Banking – Ireland