The loan and lease portfolio grew by 6 pct over the year

  • The volume of loans that are long-term overdue remains small at only 1.4% of the portfolio in February
  • The total deposits of Estonian companies and households in February were at the same level as in the previous month and stood at 10.8 billion euros

The loan and lease portfolio of Estonian companies and households grew by 6% over the year to February. The total volume of loans and leases increased over the month by 87 million euros to 16.2 billion euros.

The total stock of loans and leases to companies was 7% larger in February than a year earlier. The 770 million euros of new loans and leases to companies was around the same as the average for last year. More than half of the long-term loans issued in the first months of 2016 were granted to companies in real estate and retail that are mainly focused on domestic consumption.

The stock of housing loans continued its stable growth in February and was 4.3% larger than a year earlier. As is usual in the first months of the year, the volume of new housing loans was lower in February and stood at 68 million euros. As in previous months, the volume of car leases grew fast and was 18% larger in February than it was a year earlier. The stock of overdraft and credit card lending increased in February for the first time in several years, increasing by 0.7% over the year.

The average interest rates on the new loans issued during the month were at the same level as in the preceding months. The interest rate for long-term loans taken by companies was down slightly in February at 2.1%, but this rate varies with the risks of the project that the loan is for. Competition is tight between the banks in the corporate loan market, and this is leading to a reduction in interest margins. The average interest rate on housing loans issued during the month remained stable at the level of the preceding months of 2.2%.

The quality of the loan portfolio has remained good. The percentage of loans overdue by more than 60 days in the loan portfolio increased slightly in February to 1.4%, but this is still small. The volume of long-term overdue loans increased mainly because of an increase in the volume of overdue loans to industrial companies.

The total deposits of Estonian companies and households in February were at the same level as in the previous month and stood at 10.8 billion euros. Total deposits were 9.7% larger in February than a year before, meaning that the deposits of Estonian companies and households continue to grow faster than their bank loans.

Source: Bank of Estonia

Auhtor: Mari Tamm, Economist at Eesti Pank

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