The amount borrowed in November by companies from banks operating in Estonia was the largest seen in recent years
Economist at Eesti Pank
- A large part of the loans to companies went to those in real estate and in transport and storage
- Housing loans and car leases continued to grow rapidly
- The growth in deposits remained strong in November at 10% over the year
The demand from Estonian companies and households for loans was strong in November. The portfolio of loans and leases to companies and households grew by 220 million euros over the month, which is one of the largest increases seen in recent years. The total size of the portfolio increased by the end of November to 17.5 billion euros.
The value of new loans issued to companies and leases signed with them in November was the largest seen in recent years. Corporate investment has grown this year and so the increase in demand from companies for loans was expected. Banks operating in Estonia issued 380 million euros of new long-term loans to companies. A large part of the loans to companies went to companies in real estate, which took 39% of the loans, and in transport and storage, which took 32%. Companies in most other sectors borrowed more in November than they did in the previous November though. The portfolio of corporate bank loans was smaller than a year earlier however, as one bank transferred a part of its loans to the portfolio of its foreign parent bank in August and September. Without that, the growth in the corporate loan and lease portfolio over the year would have averaged 6% in the past four months.
The housing loan portfolio was up by 6.7% over the year in November, a similarly rapid rate to those of the preceding months. Demand from households for loans is supported by rapid growth in incomes, and the highest level of confidence about the future seen in recent years. The 101 million euros of new housing loans was 9% more than was issued in the same month a year earlier. The portfolio of car leases continued to grow rapidly for the fourth consecutive month and it was 15% larger than a year earlier. Demand for borrowing with overdrafts and credit cards has been moderate as incomes have risen fast and the portfolio of such loans grew by 3% in November, like in October.
The average interest rates on new loans remained low. Competition between banks in the corporate loan market is tight and the interest rates on new long-term loans have mainly remained lower than before in the second half of the year. The average interest rate for long-term loans taken by companies in November was 2.0%. The average interest rate on new housing loans rose a little in the first half of the year, but in recent months it has fallen back slightly. The average interest rate for housing loans issued in November was 2.3%.
The deposits of companies and households in banks also grew rapidly in November, at a rate over the year of 10%. The growth in household deposits is supported by the rapid rise in incomes. Household deposits were up 9% in October at 6.7 billion euros, and the growth rate has held constant for some months. Growth in corporate deposits also remains strong at 11% over the year. Faster growth than before in the economy has seen corporate sales revenues increase. Investment in fixed assets has also increased, and this may to some extent slow the growth in liquid corporate assets.
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