The volume of loans and leases granted to companies and households continued to grow at a subdued pace in June, similarly to previous months. Compared to June 2013, the portfolio increased by 2.8%; its value was 15.1 billion euros.
The annual growth of the portfolio of loans and leases granted to companies was positive in almost all sectors, reaching 4.3% in June. The volume of short-term corporate loans and leases remained at a level similar to previous months, but the volume of loans and leases related to long-term loans (mainly for fixed asset investments) decreased to 170 million euros in June, while in May, the figure had been more than 230 million euros. Companies in the agricultural and industrial sector took out fewer long-term loans than in previous months.
In June, the volume of new loans issued to households remained at the level of earlier months. New housing loans totalled to 66 million euros, which is approximately the same as in the previous three months. The housing loan portfolio continued to increase slowly, with its annual growth reaching 1.7% in June.
Loan interest rates did not change considerably in June. The average interest rate on long-term corporate loans issued in June was 3.2%, while the interest rate on housing loans was 2.5%.
The loan quality of the banks continues to improve. The percentage of loans overdue by more than 60 days fell from 1.8% in May to 1.7% in June.
The total deposits of companies and households at the end of June stood at 9.3 billion euros. Compared to last month, in June the stock of non-financial corporate deposits decreased by 33 million euros and the annual growth of deposits fell to 6.8%. The volume of deposits contracted due to a decrease in corporate deposits – the volume of corporate deposits was almost 100 million euros smaller in June than in the previous month.
Banks earned 113 million euros in net profit in the second quarter. Nearly a third of it came from dividends paid out by subsidiaries. Without it, the amount of profit was similar to that earned in earlier quarters. The profitability of banks has been supported by a decrease in administrative expenses and a reduction of previously made write-downs for loan losses, but on the other hand, the net interest income of banks declined in the second quarter.
Source: Bank of Estonia
Author: Jaak Tõrs, Head of the Financial Stability Department of Eesti Pank