Bank of Estonia: Companies are borrowing less from banks than before ({{contentCtrl.commentsTotal}})

Monthly change and annual growth of household and corporate loans and leases.
Monthly change and annual growth of household and corporate loans and leases. Source: Bank of Estonia

This October, a little less money was issued in new long-term loans and leases to companies than on average over the past year, which suggests that demand for loans is somewhat weaker. As corporate confidence has faded noticeably, companies may be delaying investment into the more distant future, Bank of Estonia economist Raido Kraavik said on Monday.

The portfolio of one bank was taken out of Estonia, which reduced the stock of bank loans and leases to €9.3 billion in October, meaning the yearly growth in the portfolio slowed to 2.7 percent. Without this event, growth would have remained at 5 percent, as in preceding months, Kraavik said in a press release.

Rapid wage growth, meanwhile, has kept demand for loans from households strong. The stock of housing loans totals €7.9 billion, and yearly growth therein remains at close to 7 percent. The average value of each loan has increased to €84,000, as a result of which the total volume of new housing loans has been up by 3 percent on year in the past three months.

Cars continue to be leased in relatively large numbers, though growth in the total amount issued in leases has been restrained in recent months. In the past three months, the number of cars leased by households and companies fell by 3 percent on year. The average value of each leas has come down somewhat, but still remains higher than one year ago at €18,500.

Businesses' expectations for the future have worsened in recent months, but their financial results remain good. As a result,  the quality of banks' Estonian loan portfolio has remained very good. The banks have €90 million of loans currently overdue by more than 60 days, indicating that the share of such loans in the portfolio has fallen below 0.6 percent.

The average interest rate on corporate loans increased further in October to reach 3.8 percent. The was due primarily to the rise in the average interest rate on loans to real estate companies, while rises in other sectors were smaller.

The average interest rate on housing loans has held steady in recent months at 2.6 percent. Banks have been able to increase the price of their loans as competition has eased in the banking market.

Bank deposits of the non-financial sector, meanwhile,continue to grow very fast. Household deposits have increased to €8 billion, up 10 percent on year, while corporate deposits have grown by 7 percent to €6,8 billion.


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Editor: Aili Vahtla

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