The volume of deposits has increased by 11 pct over the year

The volume of loans and leases issued to companies and households was 15.5 billion euros at the end of June. Year-on-year, the loan and lease portfolio has grown by 2.9%. Annual growth in the volume of loans and leases to companies decelerated to 2% in June. The areas that saw the fastest growth in corporate borrowing over the past year were trade and real estate development.

The growth of the household loan and lease portfolio accelerated somewhat. Over the year, the volume of housing loans has increased by 3.8% and the volume of other loans by 4.3%. Housing loans worth 81 million euros were issued in June, i.e. about the same amount as in the previous months. Car leases issued to individuals have increased quickly, while car leases to companies have decreased by the same amount. In June, 3% more car leases in total were issued than the same time a year before.

The interest level of loans and leases continues to be low thanks to low base interest rates. The interest rate on both housing loans issued to households and long-term loans issued to companies was 2.2% in June.

The quality of loans issued by banks declined a little, similarly to the previous months. The share of loans overdue for more than 60 days grew to 1.7% of the loan portfolio. The share of loans overdue has increased the most among companies related to agriculture and real estate development.

Companies and households are still actively depositing their funds. Over the past year, the amount of corporate and household deposits in banks’ balance sheets has increased by 10.7%. Corporate deposits have seen a particularly fast rise, as their annual growth increased by 14.2%. Like in the previous months, household deposits have gone up by almost 8% per year.

Banks earned 261 million euros in profit in the second quarter. The greatest factors impacting the change in profits were the dividend income from subsidiaries (229 million euros) and the income tax withheld from the large dividend payment made from the profit of the previous years (45 million euros). Without one-off transactions, the banks earned 77 million euros in profit in the second quarter, which is 6% less than in the second quarter of last year. Profits were supported by an increase in commission income, but decreased because of smaller net interest income and larger administrative expenses.

Source: Bank of Estonia

Author: Jaak Tõrs, Head of the Financial Stability Department

The low investment activity is reflected in the slower growth of corporate debt

The growth of corporate debt decreased at the start of the year. In quarterly terms, the volume of loans taken and bonds issued stopped increasing by the end of the first quarter of 2015, but year-on-year, the growth reached nearly 4%. The volume of long-term loans has decreased because of moderate investment activity, both in case of loans taken from the Estonian financial sector and loans taken from abroad.

Corporate equity decreased somewhat in the first quarter. Reduced profits and relatively substantial dividend payouts meant that reinvested profits also decreased, and the growth of equity, which was fast-paced after the economic crisis, stopped. In international comparison, however, the level of equity in the Estonian corporate sector is quite high.

The incomes and savings of households are still growing faster than their loan liabilities. Higher incomes helped the cash and deposits of households to increase by 9% over the year, to 6.3 billion euros. At the same time, loan liabilities grew by 3.5% and reached 7.8 billion euros. The growth rate of both long-term housing loans and short-term loan liabilities has accelerated somewhat. The indebtedness of households as a ratio of disposable income decreased and as a ratio to GDP remained at 40%.

Like in the past five years, Estonian residents still invested or returned more funds abroad than they took in from there. This was because Estonian residents still saved more in the first quarter than they invested.

Source: Bank of Estonia

Author: Taavi Raudsaar, Economist at Eesti Pank

Estonian islands get 4 new ferries

Construction of the four brand new ferries commissioned by the state-owned company Port of Tallinn to operate subsidized routes to Estonia’s large western islands is on track and the Turkish and Polish shipbuilders are to deliver the vessels in August next year.

“Construction of the new ferries is on track at the shipyards in Turkey and Poland alike, metalwork is being done, simultaneously work is being done to lay down plans for the vessels’ external design, interior design and ticket selling system,” Sirle Arro, head of the marketing and communication department at Port of Tallinn, told BNS.

“In some stages of construction, such as cutting of metal and ordering of material, they are even ahead of schedule. Our collaboration with the ships’ designer and the shipbuilders is altogether constructive,” Arro added.

Arro also said the port company expects all crew members of the ships currently sailing between the mainland and the western islands to apply for jobs on the new vessels.

On Oct. 31 last year Port of Tallinn signed contracts on the construction of four new passenger ferries for the routes between mainland Estonia and large western islands with Polish Remontowa Shipbuilding and Turkish Sefine Shipyard to build two ferries each.

The ferries are being built in shipyards located in Gdansk, Poland and Altinova/Yalova, Turkey. The 114 meters long vessels will accommodate 150 passenger cars or 12 road trains and have passenger places equipped with safety devices for 700 passengers. The new ferries are designed by the Norwegian company LMG Marin.

Source: BNS

Japanese retail giant buys Estonian co Fits.me

The Japanese retail and wholesale group Rakuten has acquired 100 percent of Fits.me, a startup founded in Estonia and now headquartered in London that develops “virtual fitting rooms,” Techcrunch reported.

Rakuten plans to run Fits.me as a standalone business, where it will continue to develop its technology, grow its business and work with existing clients. The latter includes Thomas Pink, Hugo Boss and home shopping channel QVC.

James Gambrell  will stay on as CEO of the 65-person company, which still lists co-founders Heikki Haldre and Paul Pallin as active employees.

Fits.me offers two-way technology that lets online buyers who cannot physically try something on better visualize how those items might fit them, and lets retailers collect more information about the preferences and interests of visitors to their sites.

“Not only does the virtual fitting room provide customers with a more realistic shopping experience, it also empowers merchants with the valuable data they need to continually improve their service,” Rakuten’s CEO and founder Hiroshi Mikitani said in a statement, describing the acquisition as a natural complement to Rakuten’s growing portfolio of e-commerce and marketing services.

Techcrunch said Rakuten has been on a buying and investment spree in the last couple of quarters, which most notably included a 530 million U.S. dollar round of funding for Lyft in March and the launch of a share offering in June to raise 1.5 billion dollars to help finance some of that activity.

Prior to Rakuten buying Fits.me, the company, founded in 2010, was in the process of raising a round of funding specifically looking for strategic investors to complement the 14.3 million U.S. dollars it had already received from Gambrell, Conor Venture Partners, Entrepreneurs Fund, SmartCap and a number of others.

With consolidated sales of 598.6 billion yen (4.36 billion euros) and a net profit of 70.6 billion yen (515 million euros) in 2014, Rakuten ranks as one of the biggest retailers globally.

Source: BNS

Government creates a Global Estonia Network

The goal of developing a Global Estonia network is to boost exports and bring investment to Estonia, together with the wider exchange of information and communication of state messages. The network will be comprised of Estonian foreign representations, honorary consuls, business delegates, fellow-countryman living and working abroad, friends of Estonia and their organisations.

The basis for forming the Estonian network is mainly to develop and widen the connection of existing channels and improve their cooperation, as the Ministry of Foreign Affairs, foreign representations, Enterprise Estonia, the Estonian Institute and others already have functioning networks. Creating and managing an integrated global Estonian network is ideally suited for the Ministry of Foreign Affairs and its foreign representations, where a significant fundamental structure in the form of existing lists is already present. A centrally organised network enables communication based on target group or target message, and not necessarily based on institution.

Possible areas that the network is planning to cover include: business diplomacy, export and investments; culture, science and education; media; Estonianism and politics.

Global Estonia network is a concept in development.

Source: GOVERNMENT COMMUNICATION UNIT

Estonia’s territory is 45,339 km2

The total land area of Estonia has turned out to be bigger by 112 square kilometers than previously thought as a result of aerial photography and airborne scanning carried out by the Land Board in recent years, which also has enabled the authorities to adjust the borders and size of territory of individual administrative units.

The new size of the territory of Estonia measured on a single plane is 45,339 square kilometers, compared with 45,227 square kilometers shown in the statistics of the Land Board earlier, spokespeople for the Land Board said on Thursday.

“Where previously we used the so-called statistical territory size set out on maps on paper nearly 20 years ago, we now use significantly more precise data retrieved from electronic databases,” Director General of the Land Board Tambet Tiits said. “For instance, in the past a pencil or a marker was used to set down a border on the map, the width of the line made by which may have resulted in a deviation of up to 50 meters compared with the actual border,” he said.

The biggest differences with the older maps were recorded in the administrative units bordering on bodies of water, the administrative boundaries of which were changed to tally with the waterline. The biggest changes in the size of territory result from changes to the waterline of the Baltic Sea, Lake Peipsi, Lake Vortsjarve, Narva River and the Narva Reservoir.

For instance, the size of the administrative territory of the city of Narva was reduced by 20 percent to adjust its borders with the Narva Reservoir waterline and the new size of the city is 6,895 hectares compared with 8,454 hectares earlier. Also the Lake Peipsi coastal town of Kallaste and the Lake Peipsi island Piirissaar grew by more than 10 percent – Kallaste by 33 hectares and Piirissaar by 104 hectares.

Also the Estonian capital, Tallinn, is now bigger by 104 hectares than in previous records.

Source: BNS

Estonia’s new Minister of Foreign Affairs is Marina Kaljurand

Minister of Foreign Affairs Marina Kaljurand took office on July 16, 2015 by by taking the oath of office before the Riigikogu.

“In assuming the duties of a member of the Government of the Republic, I am aware that I am responsible in that office to the Government of the Republic and to my conscience. I solemnly swear to remain faithful to the constitutional order of the Government of the Republic and to dedicate my energy to ensuring the well-being and future of the Estonian people,” the Minister of Foreign Affairs Marina Kaljurand said, in reading out the oath of office of a member of the Government.

President Toomas Hendrik Ilves appointed Marina Kaljurand as Minister of Foreign Affairs yesterday on the basis of the proposal of Prime Minister Taavi Rõivas. According to law, the Minister can start the performance of her duties upon taking the oath of office before the Riigikogu.

The Minister of Foreign Affairs Keit Pentus-Rosimannus submitted her resignation to Prime Minister Taavi Rõivas on Sunday, 1 July. Yesterday, the President of the Republic relieved Pentus-Rosimannus from the office of Minister of foreign affairs.

Before taking the office of the Minister of Foreign Affairs, Kaljurand was the Undersecretary on Political Affairs of the Ministry of Foreign Affairs in 2014–2015. During the same period, she was also an Estonian Expert of the UN Group of Governmental Experts on Cybersecurity.

In 2011–2014, Kaljurand was the Ambassador of Estonia to the U.S.A. and Mexico and in 2011–2013 also to Canada. In 2008–2011, Kaljurand was the Undersecretary on Economic and Development Affairs of the Ministry of Foreign Affairs. In 2007–2011, Kaljurand was the Estonian Ambassador to   Kazakhstan, in 2005–2008 to the Russian Federation and in 2004–2006 to Israel. In 2002–2005, Kaljurand was the Undersecretary on Legal and Consular Affairs and Legal Counsellor of the Ministry of Foreign Affairs.

Marina Kaljurand has also held the post of Director General of the Legal Department, Director of the International Agreements Department and Third Secretary of the Press and Information Department of the Ministry of Foreign Affairs, Counsellor at the Estonian Embassy in Helsinki and Lecturer of Law of the School of Economics of the Tallinn University of Technology.

Marina Kaljurand holds a master’s degree in law from the University of Tartu (cum laude), and she has also graduated from the Estonian School of Diplomacy and acquired a master’s degree in international law and diplomacy from Tufts University in the USA.

Source: GOVERNMENT COMMUNICATION UNIT

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