The housing loan portfolio grew by 2.8% in 2014

Annual growth in the portfolio of loans and leases to Estonian companies and households slowed to 2.7% in December.Growth slowed because company loan volumes were reduced, partly as a result of the reclassification of client sectors and economic units for reporting purposes. The total loan and lease portfolio of companies and households stood at 15.3 billion euros at the end of December.

New loans and leases worth 854 million euros were issued to companies in December, which was the largest monthly amount for 2014. The volumes of both short-term and long-term loans issued during the month were above their averages for the year and the largest volumes of long-term loans went to real estate companies.

The annual growth in loans and leases to households accelerated to 2.8% in December due to an increase in housing loans. In the last month of the year, 75 million euros of new housing loans were issued, which is a similar amount to that seen in the preceding months.

The average interest rate on loans issued in December was similar to that of the previous month. The average interest rate for housing loans stayed at 2.2%, where it had been in November, and the average interest rate for long-term corporate loans was 2.7%.

The share of loans overdue for more than 60 days accounted for 1.7% of the loan portfolio in December. Although there was some reduction in the volume of overdue loans in December, it was partly because of earlier write-downs.

Deposits continued to grow rapidly. The deposits of companies and households were up 7.9% over the year. The total volume of deposits grew to 203 million euros in December, 140 million of which was corporate deposits. Non-resident deposits also increased during the month.

Banks earned around 59 million euros in net profit in the fourth quarter of 2014. Net profit was pulled down by a fall in net interest income, higher personnel costs and write-downs of loans. The ratio of net profits to assets was 1.6% for the banks in the final quarter of 2014.

Source: Bank of Estonia

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

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