Estonian banking sector in April 2014

Annual growth in the total volume of loans and leases to Estonian companies and households accelerated to 1.7% in April. The loan and lease portfolio mainly grew as corporate loans increased in volume by 76 million euros to 14.9 billion euros.

The annual growth in the corporate loan and leasing portfolio rose to 2.1% in April. Growth mainly accelerated due to increased borrowing by agricultural and manufacturing companies as the loan stock was 17% up on last year in agriculture and 9% up in manufacturing. Although real estate companies took almost a fifth more in loans from banks and leasing companies than they did a year ago, the loan stock of the sector was slightly smaller than a year ago due to repayments. Even so, loans to real estate and construction companies still make up around one third of the total volume of all corporate loans and leases.

Annual growth in new housing loans was slower in April at 26% than in the first quarter, when it was 35%. As only 2% more housing loan contracts were signed in April than a year ago, the increase in the value of the loans is explained by a rise in the average price of the apartments being purchased. The housing loan portfolio grew by 12 million euros during the month to 5.9 billion euros and its annual growth rate stood at 1.6%.

Interest rates for loans did not change much in April. The average interest rate for housing loans granted in April was 2.6%, and that for long-term corporate loans was 3.3%.

The share of loans overdue for more than 60 days accounted for 1.9 per cent of the loan portfolio. Overdue loans have remained at the same level throughout the past half year. Loans overdue by more than 60 days in the housing loan portfolio totalled 79 million euros in value, accounting for 1.3% of the portfolio.

Household deposits continued to grow rapidly in April. The annual growth in household deposits remained at the high 7.8% of the previous month, reflecting the continuation of relatively fast growth in incomes. Corporate deposits increased by somewhat less than household deposits in April, and the total value of household and corporate deposits was 9.3 billion euros at the end of the month.

Source: Bank of Estonia

Author: Jana Kask, Deputy Head of the Financial Stability Department of Eesti Pank

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