Figures from the Central Bank show that lending to consumers continued to fall sharply in December, but the drop in lending to businesses was not as sharp as in previous months.
The bank said loans to households were 5.2% lower in December than in the same month in 2009. This compared with an annual decline of 4.8% in November.
Lending for mortgages picked up slightly in December, but loans for other consumer spending continued to drop sharply.
Lending to businesses was down 1.2% compared with December 2009, but this was a slight improvement on the 1.9% fall in November. During December, businesses paid back €51m more than they borrowed, the smallest gap recorded in the second half of this year. Loans of more than five years to firms showed the biggest drop during 2010.
The figures also show that private sector deposits - which include deposits from households, businesses, financial institutions and pension funds - dropped 7.6% or €15 billion last year, with deposits from non-financial companies falling more than 16%.
The figures also show that Irish banks' borrowings from the European Central Bank dropped by €2.8 billion during December, bringing the total borrowed to €94.6 billion.
Figures released by the Central Bank last month showed that, by the end of 2010, it had lent just over €51 billion to Irish banks in emergency support.