Syndicated News Archives - Page 3 of 306 - Kelly Rahill Accountants

Central Bank to assess commercial property-focused funds

The Central Bank will conduct a “deep dive” into the role of property funds in the domestic commercial real estate sector and assess whether a macroprudential response is needed to any potential risks, Governor Gabriel Makhlouf said today.

Research from the Central Bank showed that Irish investment funds now account for more than 35% of the rapidly growing commercial real estate market, having invested a total of €18 billion in property and land here

“My prime motivation is to understand much, much more and shine a light on exactly what’s going on because one thing I want to absolutely avoid is getting on the back foot if something happens and it has an impact on the financial system as a whole,” Mr Makhlouf told a news conference today.

The Central Bank also announced that it would not force lenders here to hold more capital under two buffers it levies on them – the countercyclical capital buffer (CCyB) and Other Systemically Important Institutions (O-SIIs).

Under the O-SIIs, banks identified as systemically important to the domestic economy because of their size and market share must hold additional capital. 

Barclays and Bank of America were designated as O-SIIs for the first time today after they moved significant operations to Ireland as a result of Brexit. 

The bank’s Irish subsidiaries will have to set aside 0.75% of risk-weighted assets. 

Meanwhile, UniCredit and Depfa Bank’s Irish units are no longer designated as O-SIIs, the Central Bank said.

Central Bank Governor Gabriel Makhlouf, one of the newest members of the European Central Bank’s Governing Council, also said today that negative interest rates were an effective measure.

But he added that that they would be more effective if governments backed them up with fiscal measures. 

“Are negative rates working? I think they are working, which is why the governning council took the decisions it did back in September,” Mr Makhlouf told today’s news conference in Dublin.

“The point that Mr Draghi made at the time is that monetary policy would work much more effectively if it was supported by other tools, in particularly fiscal tools,” he added.

Article Source: Click Here

No change to Central Bank’s mortgage lending rules

The Central Bank has decided not to make any changes to mortgage lending rules here that limit how much people can borrow from banks in order to fund house purchases. 

Following a review, the regulator has concluded that the measures continue to meet their objectives of strengthening bank and borrower resilience.

It also said the measures reduce the likelihood and impact of a credit-house price spiral emerging. 

Without the restrictions, the Central Bank estimates that house prices this year would been 15% to 25% higher than they currently are. 

The measures were introduced in 2015 in order to strengthen the resilience of borrowers and lenders and to reduce the likelihood of an unsustainable credit fuelled housing boom. 

The Central Bank claims the rules are not meant to target house prices. 

The rules include a borrowing limit of three and half times gross income, while borrowers must have a particular level of deposit set aside dependent on whether they are buying a house for the first or second time or as an investment. 

The decision not to change the restrictions is likely to come as a disappointment to some would-be-borrowers who had been hoping for some relaxation in order to enable them to borrow funds they require to make a purchase. 

Some in the banking industry and in politics are also likely to be unhappy.

Earlier this year, AIB chief executive Colin Hunt said the rules should not be set in stone. 

Taoiseach Leo Varadkar also expressed hope that there would be some changes in order to help those renting, while also recognising the independence of the Central Bank. 

In its 2019 review, the Central Bank said the measures have been effective in strengthening borrower and lender resilience and in limiting the potential for an adverse credit-house price spiral to emerge. 

Without them, both house price levels and the proportion of highly indebted mortgage borrowers would likely have been significantly higher this year, it said. 

It added that while the aim of the measures is not to target house prices, analysis suggests that without them, affordability pressures for mortgage borrowers would have been even more acute.

It maintains that supply restrictions, not the lending rules, are what is continuing to fuel House price growth.

In its latest Financial Stability Review, the Central Bank also says that the main risks facing the economy here continue to stem from external developments, such as falling global interest rates and Brexit,.

It also pointed to a gradual domestic build up of cyclical risks in the economy as it comes close to capacity. 

The Central Bank said the banking system is now better able to absorb shocks, but cautioned that further progress is needed in key areas such as non-performing loan reduction. 

The review concludes that the continuing risk of a disorderly Brexit and the macroeconomic shock that could follow would be sizeable, with more severe effects in certain regions and sectors. 

It also identifies the growth in leveraged lending markets internationally, through the growth in the use of instruments such as collateralised loan obligations. 

Changes in the international trading and tax environment could also impact Ireland as a small open economy that is highly integrated into global supply chains, it cautioned. 

The possible re-emergence of sovereign debt concerns in the euro area is also a worry, the bank claims, with sovereign debt levels in some parts of the euro zone remaining high. 

If a disorderly Brexit does not arise, then the prospects for the Irish economy remain favourable, it said, but the economy is also near capacity and credit growth is strengthening.

On sovereign debt, the Central Bank found ratios of debt to the GNI* measurement of the size of the economy have improved in recent years on back of strong growth, but a range of possible shocks have the potential to impact that.

The bank also points to possible risks in the non-bank financial sector.

Article Source: Click Here

First-time buyers drive demand for mortgage approvals

New figures from Banking & Payments Federation Ireland show strong growth in mortgage approvals figures for October, driven by demand from first-time buyers.

The BPFI figures show that a total of 4,514 mortgages were approved in October . Of these 51.6% were for first-time buyers while mover purchasers accounted for 27%.

BPFI also said that the number of mortgages approved in October rose by 18% month-on-month and by 5.9% year-on-year.

Mortgages approved in October were valued at €1.020 billion. First time buyers accounted for €547m of this, while  €308m were accounted for by mover purchasers.

The value of mortgage approvals rose by 22.5% on a monthly basis and by 9.7% on an annual basis. 

Meanwhile, re-mortgage and or switching approvals rose by 17.1% in volume on the previous month and fell by 1.5% year on year.

Article Source: Click Here

Contactless payments grow steadily; BPFI

Consumers made almost 1.5 million contactless payments a day between July and end-September, according to figures from the Banking & Payments Federation.

Contactless payments are those where consumers ‘tap’ their cards or devices and make payment without inputting a code on the payment device.

The number of such payments grew by 44% year on year in the three month period with almost 135 million payments made to a value of more than €1.6 billion.

Just over four in ten credit and debit card payments were contactless in the period accounting for 11% of the total value of card transactions.

Contactless payments are relatively low value, averaging €12.03 per payment.

That compares with €40.73 for all debit card payments and €75.86 for credit card payments.

There is a €30 limit on a contactless payment, above which level consumers are required to input a pin in order to execute a transaction.

“Consumers want fast, simple and secure payments. That’s why they have adopted contactless payment so quickly,” Brian Hayes, Chief executive of the BPFI said.

“With contactless-enabled cards already in most wallets, future growth will come mainly from increased usage of contactless payments and the latest figures show that consumers are using contactless payments more and more.”

Article Source: Click Here

Economic growth stretching services – Ibec

The employers’ group Ibec has warned that bottlenecks in transport, housing and childcare are making it more difficult for companies to hire and retain workers.

In its latest Quarterly Economic Outlook, Ibec says it expects the economy to grow at a more moderate pace in the coming years.

The employers’ group expects the economy to grow strongly this year at 5.9% and to continue at a slower rate of 3.1% next year.

But the strong rate of growth in recent years means parts of the economy are becoming stretched.

It said problems with housing, childcare and transport are all making it difficult to hire and retain workers.

That in turn is beginning to affect the expansion plans of companies.

The report noted that while more workers have come from abroad in recent years, Ireland is a relatively less attractive destination today compared to the past.

It said the impact of quality of life issues is also evident in the fact that more Irish nationals are now emigrating than returning home.

The report noted that 77% of companies intend to increase wages next year, at an average of 2.6%.

Ibec Chief Economist, Gerard Brady, said: “While the outlook is still positive, the pace of growth is likely to be more moderate in the coming years.

“Feedback from our members indicates businesses are increasingly finding that the tight labour market and under provision of vital infrastructure is materially impacting on companies’ expansion plans. We are at a point now where numbers in employment will have increased by almost 500,000 since 2012.

“The failure to match this rapid growth in the number of people at work with a requisite increase in public infrastructure has given rise to growing congestion and problems in areas like transport, housing, and childcare.

“In turn, this is making it more difficult to attract and retain the workers needed to meet potential demand.”

Article Source: Click Here

Highest weekly earnings in ICT sector – CSO

Average weekly earnings in the economy grew by 3.4% in the year to the end of September, according to the Central Statistics Office. 

Average earnings in the private sector grew by 3.9% while earnings in the public sector grew by 1.3%. 

The highest average weekly earnings were in the information and communications sector at €1,255.49 followed by Financial, insurance and real estate activities at €1,078.43.

The lowest average weekly earnings was in the Accommodation and food service activities at €383.75 followed by the Arts, entertainment, recreation and other service activities sector €495.31.

Wages increased across all sectors of the economy.

The largest increase was in Administrative and support services which rose by 7.2% followed by Information and communications at 6.8%. 

Article Source: Click Here

State fund loses €750k due to ‘human error’

A State fund set up to support jobs in Ireland lost €750,000 on an investment because of a human error which wrongly categorised the money as euro when it should have been in dollars. 

When the rate of exchange moved against the State body it lost thousands because it failed to put in place a mechanism to offset a loss caused by a movement in currencies. 

The investment was made by the State’s Strategic Investment Fund which is part of the National Treasury Management Agency. 

The issue was highlighted in a periodic report by the Public Accounts Committee which questioned the agency about the “control weakness”. 

The report said, “The NTMA explained that the Agency purchased a fund in dollars, but it was not designated or marked on the spreadsheet record as such. It was recorded as a euro fund. 

“Subsequently, when the error was discovered, the dollar exchange rate had moved against the NTMA and the investment return was down €750,000.”

The Public Accounts Committee was informed that the NTMA had corrected the weakness in its processes which it said was caused by “human error”. 

The NTMA said it was confident that such a situation could not happen again. 

Article Source: Click Here

Dublin businesses face rate hike over funding row

Businesses in Dublin city could be facing a big rate increase if the Government refuses to compromise on a funding row with the city council.

The issue centres on the loss of €8.4m because of a change to rate liabilities for Irish Water facilities.

Last week councillors refused to pass a number of measures including reduced community funding, rent increases for council tenants and increased tolls on the Tom Clarke bridge known as the East-Link to balance the budget.

Dublin City Council Chief Executive Owen Keegan said these were necessary because of the loss of €8.4m through a re-evaluation of Irish Water rate liabilities.

The Government had compensated local authorities for the loss of rates due on Irish Water facilities once that body became exempt.

However, the Government informed local authorities last month that this funding would now be calculated according to population size and not on the basis of the number of Irish Water facilities in a particular local authority area.

It means a loss of €8.4 million for Dublin City Council while other councils will get an increase. 

The parties controlling Dublin city council – Fianna Fáil, the Greens, Labour and Social Democrats are demanding a restoration of the funding.

Lord Mayor of Dublin Paul McAuliffe has written to Dublin Chamber of Commerce indicating that councillors may vote for an increase in commercial rates unless the Government restores the funding.

The Lord Mayor has said he has yet to hear back from the Government.

It is believed that a total rate increase of 3.5% – compared to 1% last year – would be needed.

It would mean increases in excess of €35,000 for some large department stores in the city while chains would face multiple increases.

Article Source: Click here

Brexit hiatus lifts consumer and business confidence

Progress towards the achievement of a Brexit resolution has lifted consumer confidence this month, new research has found.

But the Bank of Ireland Economic Pulse for November also recorded that despite the brighter consumer mood, Brexit uncertainty continues to weigh on businesses’ investment plans.

The index, a composite of separate measures of consumer and business sentiment, registered at 80.6 for the month, up 3.6 on October, but down 9.3 on a year earlier.

It found that one in six people plan to spend more on Christmas presents this year on the back of an increase in consumer optimism in the period – the first in four months.

Bank of Ireland says this rise was due to the lowered risk of a no-deal Brexit cause by the further extension of Article 50.

Festive cheer also seems to be kicking in, with more people assessing their finances in a positive way heading into the festive season.

Businesses too were feeling better about their situation during the month the survey found, with increases in the index across all sectors compared to October.

However, with the outcome of the UK general election still not clear, business investment into next year is set to remain subdued as many firms place their plans on hold. 

Christmas is a vitally important time for retailers and the Retail Pulse was broadly positive, with one in five expecting their festive turnover to be higher than last year.

The housing pulse also saw a mild bounce in November, with nearly half of people expecting house prices to rise in the next year.

However, three in five predict an increase in rents. 

The Economic Pulse surveys are conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and approximately 2,000 businesses on a range of topics.

Article Source: Click Here

Black Friday sees surge in online spending but more people shop in store

Consumers still spend more in store than online on Black Friday, according to research carried out by AIB.

Analysing the card usage habits of shoppers on Black Friday 2018, the spending data revealed that 69% of consumers shopping on the day procured their goods in store with the remaining 31% shopping online.

However, the data points to a big surge in online spending on Black Friday.

Online spend was up 216% on Black Friday 2018 compared to the previous Friday, the study found.

In store spending was up 46% on the same timeline.

The items most commonly purchased on Black Friday are electrical goods, jewellery and clothing.

Consumers spent an average of €174 on electrical goods with consumers in Sligo spending the most at €218.

Tipperary residents spent the most on jewellery (€118) while shoppers in Monaghan spent the most on clothing (€70).

As well as using cards, there has been a surge in recent years in the use of digital wallets.

“More shoppers are using Apple, Google or FitBit Pay to carry out their transactions. This year we have seen a trend in consumers using their digital wallets more as they reach for their phone over their card,” Fergal Coburn, Chief Digital & Innovation Officer with AIB said.

“Apple, Fitbit and Google Pay, which are all available with an AIB current account, allow shoppers to spend up to €5,000 with a simple tap of their device. These accounted for 4% of all transactions last Black Friday and is expected to increase this year.”

Article Source: Click Here