MILAN, April 18 Residents' deposits with Italian
banks in March posted the biggest growth rate in 17 months, but
foreign funding continued to decline sharply and non-performing
loans rose, reflecting market turmoil and a deteriorating
A monthly report by Italy's banking association ABI released
on Wednesday said deposits held by residents were up 1.6 percent
last month, the biggest rise since October 2010 - reversing
months of declines or flat growth.
But deposits held by foreigners fell by 16 percent in
February - the last month for which data are available -
compared to the previous year, the eighth consecutive monthly
decline. Net funding from abroad stood at 182 billion euros,
down 32.5 percent year-on-year.
The data mirror the funding squeeze Italian banks have faced
since last summer, when the euro zone's third largest economy
was dragged into the bloc's sovereign debt crisis and its
lenders were gradually shut out of the interbank and wholesale
Since then, funding conditions have improved as Italian
lenders borrowed heavily form the European Central Bank,
scooping up 255 billion euros of cheap three-year loans in
December and February.
With the Italian economy mired in recession, gross
non-performing loans rose 16.5 percent to 107.6 billion euros in
Credit quality deterioration was marked compared to the
levels seen before the start of the financial crisis, ABI said,
with bad loans as a percentage of loans to the private sector
more than doubling to 6.3 percent in February from 3 percent in
The growth in the overall volume of loans to the private
sector stood at 0.9 percent in March, little changed from the
month before, a sign credit expansion remains sluggish despite
the ECB cash flood.
(Reporting By Silvia Aloisi)