Household deposits grow strongly

The portfolio of loans and leases to Estonian companies and households was largely unchanged in the first month of 2015 at 15.2 billion euros. The classification of clients for statistical purposes was adjusted in January, as it had been in December, and this affected the way the loan portfolio is divided between client sectors and operating sectors. Fewer new loans were issued as well, as is usually the case at the start of the year. The loan and lease portfolio increased in size by 2.7% in the year to January.

New loans and leases worth 678 million euros were issued to companies in January, which was the about the same amount as a year earlier. There were slightly fewer new short-term loans than a year earlier but around one quarter more long-term loans. The largest volumes of long-term loans issued in January went to real estate companies.

The housing loan and lease portfolio was 2.9% larger in January than a year ago. The 51 million euros of new housing loans was 14% more than was issued a year earlier. The total value of other household loans was not very different from what it was a year ago.

The average interest rate on housing loans issued in January did not reflect the fall in the six-month EURIBOR, which is the base interest rate for most housing loans. The average mortgage interest rate rose because the average marginal was raised. The average interest rate on new long-term corporate loans was 2.5% in January.

Loans overdue by more than 60 days were at around the same volume in January as in the previous month, accounting for 1.7% of the loan portfolio. A certain deterioration in the quality of loans to the retail and wholesale sector and to the primary sector of agriculture, hunting, forestry and fishing has been noticeable in recent months. This has been offset by an improvement in the quality of other loans.

The deposits of Estonian companies and households grew by 5.6% over the year to January. Growth in deposits was restrained by a reduction in corporate deposits, which have more variable growth patterns. Household deposits again grew fast, at a rate of 8.3% over the year to January. Non-resident deposits have also grown in recent months and they stood at 2.6 billion euros at the end of January, or 21% of the total of corporate and household deposits.

Source: Bank of Estonia

Author: Mari Tamm, Financial Sector Policy Division of Eesti Pank

Average salary is 1,039 euros

According to Statistics Estonia, in the 4th quarter of 2014, the average monthly gross wages and salaries were 1,039 euros and increased by 5.3% compared to the 4th quarter of 2013. In 2014, the average monthly gross wages and salaries exceeded the 1,000 euro level in the 2nd and 4th quarter.

Compared to the same quarter of 2013, the increase of the average monthly gross wages and salaries was bigger in the 4th quarter than in the 2nd quarter, when the monthly gross wages and salaries exceeded the level of 1,000 euros for the first time (in the 2nd quarter the growth was 4.8%, in the 4th quarter – 5.3%). Compared to the 4th quarter of 2013, the end-of-year irregular bonuses and premiums decreased by 2.4% per employee and decreased the growth of average gross monthly wages and salaries by 0.4 percentage points. Without irregular bonuses and premiums, the average monthly gross wages and salaries increased 5.7% in the 4th quarter.

Real wages, which take into account the influence of the change in the consumer price index, increased 5.8% in the 4th quarter of 2014 compared to the 4th quarter of 2013. The acceleration of the growth of real wages was influenced by a decrease in consumer prices in the 4th quarter of 2014. Compared to the same quarter of the previous year, real wages increased for the fourteenth quarter in succession.

In the 4th quarter, the average hourly gross wages and salaries were 6.35 euros and increased 6.0% compared to the 4th quarter of 2013.

The average monthly gross wages and salaries rose in all economic activities in the 4th quarter of 2014. Compared to the same quarter of the previous year, the average gross monthly wages and salaries grew the most in financial and insurance activities (12.5%) and the least in information and communication (0.5%). In the 4th quarter of 2014, the average gross hourly wages and salaries increased the most in financial and insurance activities (13.1%) and fell only in information and communication (0.2%).

The average monthly gross wages and salaries were 1,024 euros in October, 1,021 euros in November and 1,068 euros in December.

According to the Wages and Salaries Statistics Survey, the number of employees was 6.8% greater in the 4th quarter of 2014 than in the 4th quarter of 2013. The largest increase in the number of employees occurred in accommodation and food service activities (17.8%).

In the 4th quarter of 2014, the employer’s average monthly labour costs per employee were 1,404 euros and the hourly labour costs were 9.2 euros. Compared to the 4th quarter of 2013, the average monthly labour costs per employee increased by 5.1% and the average hourly labour costs by 5.9%. The largest increase occurred in financial and insurance activities (12.8% per month and 14.8% per hour). The smallest increase in average monthly labour costs per employee occurred in information and communication (0.5%). The hourly labour costs per employee fell only in information and communication (0.9%).

Statistics Estonia conducts the Wages and Salaries Statistics Survey on the basis of an international methodology since 1992. In 2014, the sample includes 11,920 enterprises, institutions and organisations. The average monthly gross wages and salaries have been given in full time units to enable a comparison of different wages and salaries, irrespective of the length of working time. Calculations of the monthly gross wages and salaries are based on payments for actually worked time and remuneration for time not worked. The hourly gross wages and salaries do not include remuneration for time not worked (holiday leave pay, benefits, etc.). In short-term statistics, the average gross wages and salaries are measured as a component of labour costs. Labour costs include gross wages and salaries, employer’s contributions and employer’s imputed social contributions to employees.

Average monthly gross wages and salaries, 1st quarter 2010 – 4th quarter 2014 (euros)
Year 1st quarter 2nd quarter 3rd quarter 4th quarter
2010 792 758 822 759 814
2011 839 792 857 809 865
2012 887 847 900 855 916
2013 949 900 976 930 986
2014 966 1 023 977 1 039

Diagramm: Average monthly gross wages and salaries and monthly labour costs per employee

Diagram: Average hourly gross wages and salaries and hourly labour costs per employee

Source: Statistics Estonia

See a better graph here

Households’ purchasing power grows rapidly

Households’ purchasing power is growing rapidly

In the 4th quarter of 2014, the average monthly gross wages were 1,039 euros (+5.3%, year on year). In 2014 as a whole, average gross wages increased to 1,001 euros (+5.5%).

The deceleration in the growth of wages was anticipated as enterprises’ economic results were modest last year. During the first nine months of 2014, the latest data we have currently, enterprises’ sales and total costs decreased by around 1%, total profits remained at around the previous year level, but labour costs increased by 8%. This trend is unsustainable in a longer term.

Another possible reason behind the deceleration in the growth of wages was the introduction of the labour registration obligation from July 1st, which increased the official number of employees in sectors, where wages are smaller (tourism, domestic trade, construction, etc.).

The growth of wages was broad-based in 2014, reaching 5% to 10% in three quarters of sectors. At the same time, the growth of employment varied substantially. For example, in finance and insurance, wages increased by 10% last year, while the number of employees decreased by 20%.

In 2015, gross wages will probably grow a bit less than in 2014 due to weak external economic environment. Minimum wages will grow again 2 times faster than the average wages in 2015 (+10% and +5%, respectively), lifting wages at the lower end. Households’ purchasing power will rise substantially this year, as labour income taxes were lowered by around 1.6 percentage points in January and inflation will be low. Higher wages of public workers and a rise in pensions and other social benefits will also support private consumption and thereby, economic growth.

Source: Swedbank

2014 budget turned a surplus

According to the Ministry of Finance, the state raked in 7.82 billion euros and spent 7.77 billion in 2014, which means the planned deficit turned into a surplus.

Revenues were up by 206 million euros compared to the previous years, while spending only grew by 36 million. The state expected 8.02 billion in revenues and 8.18 billion in spending.

The growth was led by tax takings, which were up by 8.2 percent, reaching 6.64 billion euros. The shortfall came in the non-tax revenues, with the state only collecting 83.6 percent of the budgeted non-tax revenue.

The state took in 330.8 million euros less in outside support compared to 2013 as many projects were pre-paid in 2013 and the EU’s budget period changed.

Financial profits more than doubled to 184.9 million euros, but still did not reach the level expected in the 2014 budget.

In the spending department, the state spent 100 percent what it promised on staff and running of the state apparatus, but made significant cuts in the investment department, spending 438.6 million euros, or only 64 percent, of what was initially planned. The total amount of investments decreased by 36.6 percent, mainly due to the EU switching over from the 2007-2013 budget period to the 2014-2020 period. Estonia did not fully benefit from the new period, while struggling to spend the balance from the previous budget period.

Source: ERR News via Estonian Review

Number of prisoners continues declining

In 2014 the number of prisoners held in Estonian penitentiaries continued declining, and at the end of the year the number of prisoners was smaller by more than 100 and offenders on probation by 600 compared to the beginning of the year, it appears from the Justice Ministry’s annual prisons review.

According to the fresh yearbook of the prison service the number of prisoners continues to decline, spokespeople for the Ministry of Justice said. While at the beginning of the year prisoners numbered 3,026 and probationers 6,138, at the end of the year the corresponding figures were 2,921 and 5,525.

During the year no murders or manslaughters were committed in penitentiaries, while eight deaths were registered. One prisoner committed a suicide, six died of a serious illness or a health disorder and a criminal investigation was launched to investigate the death of one prisoner under the Penal Code provisions dealing with negligence resulting in death. One criminal probe was opened on suspicion of sexual crimes.

“The prison system has made a big leap forward compared to the 1990s,” Justice Minister Andres Anvelt said commenting on the results. “Work environment has changed and training as well as motivation of prison guards has improved, and prisoners are dealt with personally. This all adds up to crime inside the prison as well as the number of people returning to prison declining,” he added.

Source: Baltic News Service via Estonian Review

Renewable energy made is 15 pct of the Estonian energy pie

Renewable energy made up 14.8 percent of the Estonian energy pie last year, which is 2.2 percent more than in 2013.

Estonia is on track for meeting its obligation of 17.6 percent renewable energy slice by 2020.

Although domestic production fell by close to 6 percent in 2014, 1.38 terawatt-hours were generated from renewable sources – 18 percent more than in 2013.

The quantity of subsidized renewable power reached 1.1 terawatt-hours last year, which meant a 12 percent increase in the pay-outs, to 60 million euros.

Fifty-six percent of the renewable energy output came from biomass, biogas and waste – 753 GWh came from these sources, up by about a quarter. The subsidies for this amount equalled 32.3 million euros, up 2.2 million euros from the year before.

Wind energy accounted for 42 percent of renewables in 2014, and output was up 9 percent compared to 2013. Average wind speed readings at Pakri and Virtsu were up 23 percent. As a result, subsidies increased by 20 percent to 26.3 million euros.

The ceiling for subsidized wind energy in the Electricity Markets Act – 600 GWh in a calendar year – was not reached, however.

The biggest growth compared to 2013 was in solar energy – volume of energy generated grew from 117 MWh to 524 MWh, with subsidies increasing at the same time more than quadruple rate, amounting to 28,000 euros. Solar energy still makes up a marginal amount of the overall energy picture, of course, with most of the 175 producers being micro-producers.

Source: ERR News via Estonian Review

LHV outpaced big banks in 2014

Estonian-owned LHV doubled its profits in 2014, while SEB, Swedbank and Danske all recorded a decrease or only moderate profit growth compared to 2013.

LHV reported 9.7 million euros in profits last year, compared to 4.3 million in 2013. The total value of deposits grew by 30 percent to 458 million and loans by 53 percent to 316 million euros. The bank’s investment funds increased by 34 percent to 504 million euros.

“The number of new clients and their active approach has increased our operations in all areas of activity,” LHV Group head Erkki Raasuke said.

Swedbank, the nation’s largest private bank, reported a 156-million-euro profit, down 11 percent compared to 2013.

Priit Perens, the head of the bank in the Baltics, said measures to boost efficiency have worked and they are working to further consolidate activities in the Baltics. He said the business sector is still complicated with the crisis in Ukraine, the weak rouble and low petroleum prices all having an effect.

SEB increased its profits by 1 percent to 75 million euros, while Danske bank reported a 23-million profit, far less than the 47-million-euro profit recorded in 2013.

Aivar Rehe, the head of the bank’s Estonian branch, said lower profits from financial investments and interest were the main cause for the fall.

Source: ERR News via Estonian Review

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