Deposits continue to grow rapidly

Moderate growth in the total volume of loans and leases to Estonian companies and households continued in August. The portfolio grew by 83 million euros from July, and its annual growth rate stood at 3.4%.

The annual growth in the portfolio of corporate loans and leases remained at 5%, the same level as in the previous month. The volume of new short-term and long-term corporate loans and leases in August remained close to the average for this year. Annual growth in the long-term loan and lease portfolio is driven mainly by the real estate sector, but loan growth in manufacturing and the primary sector of agriculture, hunting, forestry and fishing has also been relatively fast. Growth in the short-term loan and leasing portfolio has mainly been led by trade and manufacturing.

The volume of new loans to households remained at the same level in August as in earlier months. New housing loans of 70 million euros were taken out, which is about the same as in the preceding five months. The housing loan portfolio continued to grow moderately and year-on-year growth reached 2.2% in August.

Borrowing activity is aided by low interest rates. The average interest rate for housing loans issued in August remained at 2.5%, as it had been in July. The average interest rate for long-term loans taken by companies was affected by individual large transactions with low interest rates, meaning the average rate fell to 2.3%.

Loan quality remained essentially unchanged from previous months for the banks. The volume of loans overdue for more than 60 days increased slightly in August to make up 1.8% of the loan portfolio by the end of the month. The value of loans overdue by less than 60 days fell slightly at the same time.

Deposits continue to grow rapidly. Corporate deposits grew by 70 million euros over the month and their annual growth rate reached 10%. Household deposits shrank slightly in August because of seasonal factors, but annual growth remained at a rapid 8%. Deposits of the non-financial sector in August were slightly more than 9.5 billion euros.

Source: Bank of Estonia

Author: Taavi Raudsaar, Financial Sector Policy Division of Eesti Pank

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