Bank lending begins to stabilize

TALLINN - The volume of loans and leasing taken by Estonian individuals and companies fell the least in May in the month-on-month comparison since the beginning of this year, reports Postimees Online. The total volume of loans and leasing contracts fell by 600 million kroons (38.4 million euros) in May, in comparison to April, or by 0.2 percent.
The central bank reported that at the end of May, the volume of loans and leasing agreements reached 245 billion kroons, 6.6 percent less than a year ago and comparable to the level of the end of 2007.

Although more loans were issued in May than during the previous month, the lending activity has still not grown significantly. Companies were issued a total of more than 3.3 billion kroons in loans and leasing contracts; more than a quarter of this total amount, though, was one single major loan.
The volume of housing loans issued in May was also the highest since the beginning of the year, amounting to 578 million kroons, exceeding the year-on-year indicators for the first time this year.

The quality of the loan portfolio deteriorated again in May; the volume of loans that were more than 60 days overdue grew by 821 million kroons. The share of overdue loans in the entire loan portfolio rose to 7 percent. The portfolio’s quality deteriorated due to loans taken by companies, particularly in the commercial real estate sector. The volume of housing loans that were more than 60 days overdue fell by 77 million kroons, accounting for 4.5 percent of all housing loans.
Despite the fact that loan volume had grown slightly, the interest rates on long-term loans remained unchanged. The interest rates on new loans in May stayed at the same level as the past 12 months - the average interest rate on long-term loans issued to companies was 4.3 percent. The average interest rate on housing loans was 3.4 percent.

The volume of the savings deposits of the real economy sector (non-financial sector) continued growing in May. This fact reflects the continued cautious financial behavior of both companies and individuals.
In May, corporate savings deposits grew by more than 1.3 billion kroons, to 57.7 billion kroons, more than 10 percent above a year ago. The volume of individuals’ savings remained virtually unchanged, at 55.9 billion kroons.