Households borrowed more than previously from the banks and less from elsewhere

Taavi Raudsaar
Economist at Eesti Pank
  • Higher incomes have increased the numbers of loan clients and of those able to save
  • Estonian companies largely used their own resources to fund investment in fixed assets
  • The growth in long-term corporate loans picked up a little, but the growth in short-term loans slowed

As demand for credit is strong, the loan liabilities of households have grown strongly. Demand for loans is supported by rapid growth in incomes, high levels of confidence and very low interest rates. The loan liabilities of households increased in the third quarter at about the same rate as wages at around 7% over the year. The stock of bank loans and leases has grown more quickly in recent quarters, but the previously very strong growth in loans from other lenders, including instant loan providers, has slowed. This is probably partly because the banks have started to issue more consumption loans and leases, and also because more effective supervision has been introduced over the operations of other lenders.

Higher incomes have made it more possible for people in Estonia to save, and savings continue to grow fast. Household deposits increased by 9% over the year, and other household financial assets like cash, securities, investment fund units and loans given out grew even faster. Despite the rapid growth, the financial savings of Estonian households in relation to incomes are still below the European Union average, and many households would not have sufficient savings to cover unexpected events.

Although investment in fixed assets increased strongly in 2017, companies in Estonia were able to use their high levels of liquid assets and own funds for most of the financing. More was taken out in long-term loans than before, and the growth over the year was a little over 5% in the third quarter of last year. At the same time the stock of short-term loans shrank sharply, largely reflecting the cash flow management of some foreign-owned companies. Total corporate debt liabilities were up 1% on a year earlier. The stock of loans taken from banks operating in Estonia declined in the third quarter of last year and the stock of loans taken from abroad increased by the same amount as one bank moved a part of its loans into the portfolio of its foreign parent. Foreign investment in equity in Estonia increased, but this largely reflects the growth in reinvested income that stems from growth in profits rather more than additional foreign investment.

The Estonian economy was a net lender to the rest of the world in the third quarter of 2017, as residents of Estonia invested more financial assets abroad than they received from there. This shows that the trend of recent years for Estonian residents to save is continuing and the level of investment in fixed assets is still relatively low despite the recent growth in the past couple of quarters.

Financial sector statistics and their publication schedule


Additional information:
Hanna Jürgenson
Public Relations Office
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