OREANDA-NEWS. August 26, 2011. In July, companies were issued loans and leases in the amount of 578 million euros, including overdraft facility in the amount of 257 million euros. Due to some larger loan transactions in July 2010, this July’s year-on-year credit volume growth was notably smaller than in previous months, reported the press-centre of Eesti Pank.

Also, the volume of long-term loans was 11% smaller than a year ago, amounting, nevertheless, to 190 million euros. Lending activity is increasing the most in agriculture, where in July some 80% more credit was issued than a year ago.

The hot summer did not slow household borrowing and July posted the highest loan and leasing volume of the year. Housing loans amounted to 44 million euros in July, which is 22% more than a year ago. Still, the volume of housing loans is currently just near the levels of 2003. Consumer credit and car leasing also increased, year-on-year, by 3% and 55%, respectively, and their volume is at 2005 levels.

Irrespective of growing lending volumes, loan repayments exceeded the amount of new loans issued in July. The stock of the loan and leasing portfolio increased after a rather long time in May and June, but shrank again in July, by 201 million euros, due to the repayment of a large corporate loan.

The portfolio amounted to 14.6 billion euros by the end of July, which is 5.7% less than a year ago.

Interest margins on new loans did not change much in July. The average interest rate was 4.2% on long-term corporate loans and 3.5% on housing loans. EURIBOR growth also slowed, keeping interest rates at the same level as in June: 1.7% on housing loans and 2.4% on long-term corporate loans. Compared to the average of the last year, the interest margin on long-term corporate loans has been 0.8 pp smaller during the past three months.

Although the improving economic environment has contributed to the quality of banks’ loan portfolio, it deteriorated slightly in July. The share of loans overdue by more than 60 days grew by 25 million euros in July, accounting for 6.3% of the loan portfolio. The increase was the result of a few real estate sector loans.

Households continue to accumulate savings. Household savings grew by 30 million euros in July and the stock of savings has increased by 12% (nearly half a billion euros) in a year to 4.2 billion euros. Different from previous months, corporate savings grew as well, by 111 million euros. However, the year-on-year increase has been just 3%, showing that companies are actively using their financial buffers to finance business. The entire savings stock of the real sector was 7.6 billion euros by end-July.