Viljar Vald, specialist, Financial Sector Policy Division of Eesti Pank

Corporate lending shrank in February. Loans, leases and factoring worth 421 million euros were issued to companies. This is 4% less than in February last year. Lending declined in most sectors, including real estate, logistics and manufacturing. The agricultural sector has been the most active borrower for several months in a row: in February the volume of new loans and leases nearly doubled year-on-year. Lending to the trading sector has also been on the increase in recent months. Loan volume has in recent months been supported by an increase in overdraft facility, which accounted for more than a half of new lending.

The volume of new housing loans was 26.5 million euros, so there occurred no considerable changes in that market. New lending was 2 million euros larger on January, but still 1% smaller than in February 2010 and comparable to the level of 2003.

Car leases are clearly picking up - new car leases doubled, year-on-year, for the second month in a row. New sales amounted to 14.2 million euro, which is comparable to the start of 2004.

The real sector's financing portfolio shrank below 15 billion euros at end-February. The stock of the portfolio declined by 0.5% within the month, to 14.9 billion euros. At the end of February, the corporate credit portfolio was 10.3% and the household portfolio 3.7% smaller than a year ago.

The average interest margin on housing loans fell slightly. The interest margin declined to 1.9%, but the average interest rate on housing loans went up to 3.3%, since the 6-month EURIBOR, which is the key interest rate for most of housing loans, increased to 1.35%. The more volatile average interest on long-term corporate loans rose to 4.3% and the margin to 2.9%, but that was normal fluctuation.

The quality of the loan portfolio did not change much in February. Loans overdue by more than 60 days decreased by 9 million euros, but the share of such loans remained at 6.4% due to the shrinkage in the loan portfolio.

Household's deposits are historically large. Irrespective of low interest rates, household deposits increased by more than 70 million euros in February, exceeding for the first time 4 billion euros. Since corporate deposits decreased, real-sector deposits declined by nearly 55 million euros within the month. As a result, the annual deposit growth rate slowed to 4.6% in February.


Figure 1. Corporate long-term and short term loans and leasing issued within a month


Figure 2. New car leases

  Figure 3. Household and corporate deposits