OREANDA-NEWS. October 25, 2012. At the end of September, the loan and leasing portfolio was 0.8% larger than a year ago, amounting to 14.7 billion euros. The total stock of loans and leasing entered a steady growth path already in April, owing to the increased corporate borrowing activity, reported the press-centre of Eesti Pank.

Growth in September was also affected by a change in the group structure of a market participant, which resulted in the addition of a considerable share of leases to the aggregate loan stock indicators. Without it, the annual growth in the loan and leasing portfolio would have been 0.1%. 

The annual growth in new corporate loans remained at the previous month’s level of 25%. Companies took on more than 700 million euros worth of short and long-term loans and leasing within the month. Manufacturing companies included the most of long-term loans (43 million euros) in September, accounting for 25% of new long term lending.

The annual growth of new housing loans slowed to 5% in September. Although the number of loan contracts concluded and the loan turnover were the largest of recent years in September, the housing market is showing stabilisation signs and the rapid growth registered in summer has slowed down somewhat for now.

The average interest rate on new housing loans remained at the previous month’s level of 2.7%. At the same time, the 6-month Euribor continued declining. Since the latter is the key interest rate of the majority of loan contracts, the average interest margin on new housing loans went up to 2.2% – the highest level of the past two years. The average interest rate on corporate loans is very volatile in essence, depending on the risk levels of the loan projects issued in the respective months. In September, the average interest rate on long-term corporate loans declined to 2.9%.

The share of loans overdue by more than 60 days shrank to 4.1% in the loan portfolio. The stock of loans overdue for a long period of time contracted by about 22 million euros, primarily due to the write-off of uncollectible loans.

The volume of corporate and household deposits decreased by 107 million euros in September. Companies paid the key role in the decline. At the end of the month, households and companies had a total of 8.4 billion euros worth of deposits in their bank accounts. This is 8.8% more than a year ago.

Banks operating in Estonia earned 78 million euros of net profit in the third quarter of 2012. Quarter-on-quarter, net profit decreased 13%. The return on assets ratio declined to 1.6%, which is still a relatively high level. Banks’ profitability is reduced by the low level of key interest rates. Although the very low interest rates also help reduce the banks’ funding cost, their effect on banks’ interest income is nevertheless stronger. Net interest income declined by more than 12%, year-on-year, in the third quarter of 2012.