Eesti Pank: Corporate borrowers are behind the growth in the loan and lease portfolio

Photo: SCANPIX

The portfolio of loans and leases to Estonian companies and households was 2% larger than it had been a year earlier, standing at 14.7 billion euros at the end of January 2013. Loans and leases to the real sector continued to grow as the need of companies for financing increased and corporate borrowing ability has increased.

Annual growth in the turnover of corporate loans reached 21% in January, which is similar to the average for last year.The fastest growth was in long-term loans, with 226 million euros of loans being granted in January, two thirds of the total going to the transport, real estate and construction sectors.

Households were more active in the market for loans than at the same time in 2012. The volume of new loans for housing was 25% larger than a year earlier, while the turnover of other loans to households grew by 10%, with car leases taking the lead and increasing sharply by 49% over the year. Despite the increased boldness in borrowing, the loan and lease portfolio of households shrank by 1.5% from its position of a year earlier.

Interest rates in January were favourable for borrowing. The average interest rate for long-term loans taken by companies fell to 3.1%, while the average interest rate for housing loans remained at 2.5%, which is its lowest level in the past decade.

Having fallen continuously for almost a year and a half, the volume of overdue loans grew in January by 7 million euros. The growth came mainly from the corporate sector, though the percentage of loans overdue by more than 60 days in the loan portfolio grew during the month by only 0.1 percentage points to 3.3%.

Annual growth in deposits slowed in January to 7%. Deposits by households and companies declined during the month by 184 million euros to 8.5 billion euros. The decline was mainly caused by companies shrinking their deposits. As low interest rates do not encourage long-term saving, the share of term deposits in the structure of deposits has fallen to 31%, its lowest level for five years.