Domestic deposits increased by 7% in February

Jana Kask
Jana Kask
Deputy Head of the Financial Stability Department of Eesti Pank

The annual growth rate of the loan and leasing portfolio rose to 2.4% in February. The acceleration in the rate of growth was due to relatively active corporate borrowing over the past year, which led to annual growth of 6.3% in the business loans portfolio. Changes in the month made borrowing seasonally more subdued in February and so the total volume of loans to Estonian companies and households declined during the month by 27 million euros to 14.7 billion euros.

Companies took out 8% more new loans and leases in February than in the same period last year. After the very large one-off transactions of the previous months, the lending in February was more moderate. Almost one third of long-term loans were taken by real estate companies.

Almost 20% more housing loans were taken in February than a year before. Despite the rapid growth in new loans, the annual growth in the housing loan portfolio in February was negative. However,  the activity in the housing loans market indicates that it is probable that the total volume of such loans will start a sustainable climb in the next few months, after falling constantly for four years.

Interest rates for loans did not change in February. Both the base interest rate and interest margins remained at their levels from January. The average interest rate for housing loans granted in February was 2.5%, and that for long-term corporate loans was 3.1%.

The volume of loans overdue by more than 60 days didn't change in February, and their share in the loan portfolio remained at the 3.3% of the previous month. Although the decline in the volume of problem loans stopped at the start of this year, the quality of the loan portfolio is likely to continue improving in the coming months. The ability of borrowers to service their debts is supported by low interest rates and the improved financial situation of the borrowers. The volume of problem loans will continue to decrease in future primarily due to write-offs of uncollectible loans.

The deposits of Estonian companies and households grew by 7% over the year. After relatively fast growth in the first half of 2012, the growth rate for deposits has slowed somewhat. The total deposits of the domestic real sector grew in February by 112 million euros to reach 8.6 billion euros at the end of the month, mainly due to the growth in the funds of households. The share of deposits by foreign companies and households in the total remained at 20%, as in the previous month. 

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