Loans and leases of households grew by 2.1 pct

The stock of loans and leases granted to households and companies continued its modest growth in October, increasing by 3.3%. The monthly increase in such loans and leases has received more support from borrowing by households in the past two months than before. The total value of loans and leases to companies and households was a little over 15.3 billion euros in October.

The total volume of loans and leases to companies grew by 4.5% over the year to October. In monthly terms the growth in the total value of corporate loans and leases was relatively small at 12.5 million euros as repayments were large. Above average volumes of short-term loans were issued to companies in both September and October this year, while the volume of long-term loans was below its average at the same time. The largest share of new loans and leases issued in October went to companies in trade and manufacturing.

The annual growth in loans and leases to households accelerated to 2.1% in October. The total value of new housing loans isused was 80 million euros, which is 12% more than a year earlier. However there was no increase in the number of housing loans from October last year, which indicates that the growth in loan volumes has mainly come from an increase in the average value of the loans. Other loans to households have also increased in volume year-on-year for the past two months.

The continuing fall in EURIBOR led interest rates to decrease. The average interest rate for housing loans issued in October fell to 2.3% as a result of a reduction in average interest margins as well as in EURIBOR. The average interest rate for long-term loans taken by companies was 2.8% in October.

The share of loans overdue for more than 60 days accounted for 1.8% of the loan portfolio in October. This share has not changed by much throughout this year as payment problems with old loans have been resolved at the same time that new problems in repaying loans have emerged.

Corporate and household deposits continue to grow strongly, accelerating to a year-on-year growth rate of 9.3% in October. Deposits grew by 154 million euros over the month to 9.7 billion euros, with more than 80% of the growth during the month coming from increased corporate deposits. The annual growth in household deposits has remained at around 8% since the end of the first quarter. The value of non-resident deposits was almost the same as a year ago at 2.3 billion euros.

Source: Bank of Estonia

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

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