Companies are borrowing less from banks than before
A little less was issued in new long-term loans and leases to companies in October than on average over the past year. This suggests that demand for loans is a little weaker. As corporate confidence has faded noticeably, companies may be delaying investment into the more distant future.
The portfolio of one bank was taken out of Estonia, and this reduced the stock of bank loans and leases to 9.3 billion euros in October, meaning the yearly growth in the portfolio slowed to 2.7%. Without that event, the growth would have remained at 5%, as in the preceding months.
Rapid wage growth has meanwhile kept demand from households for loans strong. The stock of housing loans is 7.9 billion euros, and the yearly growth in it remains at close to 7%. The average value of each loan has risen to 84,000 euros, and in consequence the total volume of new housing loans has been up over the year by 3% in the past three months.
Cars continue to be leased in relatively large numbers, though the 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% over the year. The average value of each lease has come down a little in recent months to 18,500 euros, but it is still higher than a year ago.
The expectations of businesses for the future have worsened in recent months, but their financial results remain good. In consequence the quality of the Estonian loan portfolio of the banks remains very good. The banks have 90 million euros of loans that are overdue by more than 60 days, meaning that the share of such loans in the portfolio has fallen below 0.6%.
The average interest rate on corporate loans rose further in October to reach 3.8%. The main cause of this was 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%. The banks have been able to raise the price of their loans because competition has eased in the banking market.
The bank deposits of the non-financial sector continue to grow very fast. Household deposits have increased to 8 billion euros, growing by 10% over the year, while corporate deposits have grown by 7% to 6.8 billion euros.