OREANDA-NEWS. August 28, 2012. Corporate lending reached a record high of recent years in July. New loans and leases issued to Estonian companies totalled 743 million euros in July, marking a nearly 29 per cent growth from the year ago. As in the previous months, short-term lending was particularly strong in July, with transport and trading companies being the biggest borrowers, reported the press-centre of Eesti Pank.

The volume of new long-term loans grew too, compared to the previous months. The value of these loans totalled 225 million euros, of which about a third was issued to real estate and construction companies.

The issuance of housing loans decreased somewhat in July. The volume of new housing loans amounted to 49 million euros, with annual growth plummeting to 11 per cent. Household borrowing has nevertheless gained some momentum, as shown by rapid annual growth in car leases, which stood at 30 per cent in July.

Increased corporate borrowing boosted banks' loan portfolios. The loan and lease portfolios grew by 89 million to 14.6 billion euros in July. Developments in the credit market in recent months indicate that the three-year drop in the loan stock appears to be over. Banks' credit portfolios have picked up gradually since April. The total volume of loans and leases, however, was still 0.3 per cent lower in July, compared to the year-ago level.

The average interest rate on housing loans remained at 2.9 per cent in July. The six-month Euribor, the key interest rate for the majority of loans issued in Estonia, fell by 0.15 percentage points from June, thus increasing the interest margin. The average interest rate on long-term corporate loans was 3.4 per cent in July.

The quality of the loan portfolio improved further, as expected. The level of loans overdue for more than 60 days decreased by more than 6 million euros. The share of long-term overdue loans declined to 4.3 per cent of the loan portfolio in July.

Annual deposit growth remained at 10 per cent. Deposits increased by 190 million euros, of which the majority came from the business sector. At the end of July, the total volume of household and corporate deposits was 8.4 billion euros.