Corporate car leases picking up again
Economist at Eesti Pank
According to the banking statistics published today, the demand for loans was broadly in line with the average in June. There has been an increase in corporate car leases, though, as the value of car leases taken over the last year is up by 16 per cent.
The stock of corporate loans and leases was at 9.5 bn euros in June, a rise of slightly over 5 per cent year on year. This is in line with the growth seen in the corporate loan portfolio over recent years. The growth has been sustained by some major loans extended to the energy sector at the end of 2018 and in early 2019. Without these loans, the growth rate would have been lower by half.
Households’ demand for loans remained fairly strong in June, with the loan stock increasing by 7.5 per cent on a year ago, to 9.7 bn euros. Roughly the same amount of new housing loans and car leases has been issued to households in the past months as a year ago, while the issuance of other consumer loans has increased by 10 per cent. The demand for loans is fuelled by a rapid wage growth and low unemployment, boosting household confidence.
The average interest rate was 2.6 per cent in June for housing loans, slightly above the long-term average. In 2018, the interest rate was 2.5 per cent, and in 2017, 2.4 per cent. Interest rates for corporate loans have risen even faster, amounting to 2.9 per cent on average in June. This may reflect an easing in competition in some market segments. Even so, borrowing has remained fairly cheap.
Household deposits continue growing at a rapid pace – over the past year deposits have grown by nearly 10 per cent, to 7.9 bn euros. Corporate deposits have remained broadly unchanged from a year ago, standing at 6.6 bn euros. All in all, deposits at banks have grown by 5 per cent year on year.
The banking sector’s net profits excluding dividend income and income tax expenses amounted to 68 mln euros in the second quarter of 2019, accounting for 1 per cent of the total assets. The profit has been enhanced by a 10 per cent rise in the net interest income, while staff costs have increased by 15 per cent.
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