The financial behaviour of enterprises and households continues to be cautious

Siret Vildo, Financial Sector Policy Division of Eesti Pank, Specialist in Charge

Compared to September, the corporate and household loan and leasing stock declined in October by 0.4%, i.e., 1.1 billion kroons. The speed of the portfolio decrease has been relatively even across months in 2009 and October was no different in this respect.

Financing portfolios have shrunk by 5.7% year-on-year, constituting 255.2 billion kroons. The volumes of private-sector financing portfolios have been contracting for a year and the contraction has been broad-based, involving nearly all the sectors. The volume of consumer credit to households has been dropping relatively faster, by 9.2%, i.e., 2.8 billion kroons year-on-year.

The companies and households with a debt burden continue to benefit from the low key interest rate. The average value of the six-month EURIBOR remained at a very low 1.02% level in October, which is comparable to September.

Banks' risk assessments of borrowing households and companies have not changed over the past six months. Interest rates on new loans are currently shaped by banks' risk assessments, i.e., the margin, which has been around 2.4% for households and 3% for enterprises over the past six months. In October, the respective margins stood at 2.4% and 3.2%.

The level of overdue loans did not rise in October, the share of loans overdue by more than 60 days stayed at the level of 6.4%. The share of overdue loans has been affected by the low interest rate, which has decreased monthly loan repayments, and the fact that banks are actively dealing with customers having payment difficulties. At the same time, the increase in the volume of loans with shorter repayment delays and the continuously difficult economic situation refer to further deterioration of the loan portfolio quality in the months ahead. The total volume of overdue loans grew by 940 million kroons in October. The increase was caused by corporate credit. The capitalisation of banks continues to be high, ensuring that the current complicated economic situation is being coped with.

Corporate and household deposits increased in October by 0.4% and 2.7%, respectively, year-on-year. The stable level of deposits shows that enterprises and households continue to be cautious and accumulate buffers for the future, which they see as uncertain.

Figure 1. Monthly growth of household and corporate loans and leases in Estonia

Figure 2. Share of loans overdue by more than 60 days in the portfolio

Figure 3. The weighted average interest rate on housing loans and long-term corporate loans issued within a month and 6-month EURIBOR

The financial sector statistics and publication calendar are available on the web site of Eesti Pank at

For further information:
Viljar Rääsk
Public Relations Office
Telephone: +372 668 0745, +372 527 5055
viljar.raask [at]