Household deposits grow strongly

The portfolio of loans and leases to Estonian companies and households was largely unchanged in the first month of 2015 at 15.2 billion euros. The classification of clients for statistical purposes was adjusted in January, as it had been in December, and this affected the way the loan portfolio is divided between client sectors and operating sectors. Fewer new loans were issued as well, as is usually the case at the start of the year. The loan and lease portfolio increased in size by 2.7% in the year to January.

New loans and leases worth 678 million euros were issued to companies in January, which was the about the same amount as a year earlier. There were slightly fewer new short-term loans than a year earlier but around one quarter more long-term loans. The largest volumes of long-term loans issued in January went to real estate companies.

The housing loan and lease portfolio was 2.9% larger in January than a year ago. The 51 million euros of new housing loans was 14% more than was issued a year earlier. The total value of other household loans was not very different from what it was a year ago.

The average interest rate on housing loans issued in January did not reflect the fall in the six-month EURIBOR, which is the base interest rate for most housing loans. The average mortgage interest rate rose because the average marginal was raised. The average interest rate on new long-term corporate loans was 2.5% in January.

Loans overdue by more than 60 days were at around the same volume in January as in the previous month, accounting for 1.7% of the loan portfolio. A certain deterioration in the quality of loans to the retail and wholesale sector and to the primary sector of agriculture, hunting, forestry and fishing has been noticeable in recent months. This has been offset by an improvement in the quality of other loans.

The deposits of Estonian companies and households grew by 5.6% over the year to January. Growth in deposits was restrained by a reduction in corporate deposits, which have more variable growth patterns. Household deposits again grew fast, at a rate of 8.3% over the year to January. Non-resident deposits have also grown in recent months and they stood at 2.6 billion euros at the end of January, or 21% of the total of corporate and household deposits.

Source: Bank of Estonia

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

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