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