Rapid growth in loans and leases to companies continued in October

  • The portfolio of loans and leases to companies was up by 8.4% over the year in October with support from long-term loans
  • Growth in housing loans has picked up since the second quarter of this year, and was 4.9% in October
  • The volume of new housing loans was one tenth larger in October than a year earlier

The loan and lease portfolio of Estonian companies and households grew in October at a similarly fast rate to that of the preceding months. The stock of loans and leases was 6.9% bigger last month than a year before and at the end of the month it totalled 17 billion euros.

There was an increase of 8.4% over the year in the portfolio of loans and leases taken by companies from banks operating in Estonia. Growth in the domestic bank loans and leases of companies has been faster this year than last, mainly because of growth in long-term loans. There was a reduction in borrowing from abroad by companies in the first half of the year though, and so the total corporate debt has not changed in size substantially. The volume of domestic bank loans and leases to companies was affected significantly in October by individual large transactions.

Growth in housing loans has picked up since the second quarter of this year. The housing loan portfolio was 4.9% larger in October than a year earlier. The 95 million euros of new housing loans issued during the month was one tenth more than was issued a year previously. However, the number of new loan contracts signed in recent months is not notably more than a year ago, and the amount issued in new loans has mainly increased because the average value of transactions has risen. This indicates that the share of transactions with new apartments has increased. Other loans to households increased mostly because of car leases, like in previous months, and there was growth of 16% over the year in such leases.

The average interest rate for long-term loans issued to companies in October was 2.1%. The average interest rate on long-term loans to companies can fluctuate depending on the different projects that have been granted loans in each month, but the average for the year has remained close to the average for last year.

The share of loans overdue in the loan portfolio remained small. The value of loans overdue by more than 60 days at the end of October was 181 million euros. The share of long-term overdue loans was reduced a little by growth in the portfolio to stand at 1.2%.

The total deposits of companies and households continued to grow strongly in October. Total deposits increased by 163 million euros during the month to 11.4 billion euros. The volume of corporate deposits grew slightly faster, increasing by 9.5% over the year, while household deposits increased by 7.5%.

Source: Bank of Estonia

Author: Mari Tamm, economist at Bank of Estonia

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