Banks Place Hopes in Reviving Mortgage Market
Although the Q2 earnings of Estonia's top banks dipped slightly compared with last year, executives sounded a tone of optimism thanks improving consumption, a healthy business environment, and a long-awaited recovery in the real estate market.
Swedbank Estonia reported Q2 earnings of 42.2 million euros, down by 3.8 million euros from last year. The lower profit was attributed to smaller proceeds from loan interest, but the bank said the low base rate set by the European Central Bank has also revitalized the real estate market, resulting in the first growth in Swedbank's mortgage portfolio since 2008.
SEB earned 18.7 million euros, maintaining last year's Q2 profits.
"Having met with various rating agencies it must be admitted that despite the fact that the situation of the major trading partners has once again worsened, Estonia's business climate is fairly good. So good, in fact, that we haven't had such an active summer for five or six years,“ said CEO Riho Unt, predicting continued growth in the second half of the year.
Meanwhile, Nordea earned 12 millon euros, down by 1 million euros, while LHV earned 0.4 million euros, recovering from losses in Q2 last year.
On the whole, banks noted that savings deposits, both business and personal, saw a small increase since last year, while borrowing reached five-year highs and the number of defaulting loans diminished. Big business has had it best, while SMEs are still struggling, notably with rising salaries. Property values are also being driven up in certain neighborhoods.