The recovery in the economy has led to growth in corporate borrowing

Autori Taavi Raudsaar pilt

Taavi Raudsaar

Economist at Eesti Pank



Increased investment and sales turnover have led to Estonian companies borrowing actively again. The most active borrowers are companies in real estate, construction, agriculture and infrastructure. The growth in borrowing is supported by both increased demand and better access to loans.

Increased demand, an improved outlook for the economy, and the high level of utilisation of production resources mean that companies have increased their investments this year. In consequence the stock of loans and leases issued by banks operating in Estonia to businesses has grown at a steadily increasing rate, and by the end of August the loan portfolio was 5.5% larger than it was a year earlier at 9.8 million euros. The loan portfolio grew particularly quickly in monthly terms during the summer months.

Economic activity and borrowing have recovered differently in different sectors since the pandemic. The growth of the stock of loans to companies in real estate, construction, agriculture and infrastructure has exceeded 10%. At the same time though, the stock of loans to manufacturing was only 1% larger than a year earlier, and that to retailers was even 2% smaller. Signs of an increase in borrowing in those sectors have been apparent in the most recent months though.

The survey by the Estonian Institute of Economic Research on the lending environment found that companies considered the willingness of the banks to lend has steadily improved, and their estimate of this in June was on average better than before the pandemic. Real estate companies were particularly optimistic, while companies in tourism and accommodation were the most pessimistic. The Bank Lending Survey also shows that after lending conditions were tightened in the first half of 2020, they have been steadily loosened again in subsequent quarters. It is also probable that the banks have been more confident about issuing loans as fewer and fewer companies are falling into difficulties with repayments. The share of bank loans overdue more than 60 days by the end of August had fallen to 0.5%. The average interest rate on loans to companies is very variable from month to month, as it depends very much on the projects being funded and the credit risk of the borrower. The average interest rate on long-term loans issued to companies in 2021 of 2.8% is a little lower than the rates of the previous two years.


Please note: Eesti Pank published the statistics for credit institutions and lease companies for August on its website today. The statistical release describes the main changes in the statistics on credit institutions and leasing companies, covering the volume and structure of assets, loans and leases issued, deposits, and interest rates on loans and leases. The statistical release is independent of economic policy releases and is presented separately from them.

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Hanna Jürgenson
Eesti Pank
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