OREANDA-NEWS. June 29, 2010. The stock of loans and leasing to Estonian households and companies declined by 0.6 billion kroons or 0.2 per cent in May, which is less than in the first four months of 2010. At the end of May, the loan and leasing portfolio totalled 245 billion kroons, 6.6 per cent down from a year ago and comparable to end-2007 levels, reported the press-centre of Eesti Pank.

Although more loans were issued in May than in the previous four months, the activity of lending did not increase notably. The stock of corporate loans totalled over 3.3 billion kroons, with one major loan accounting for around 25 per cent of that. The stock of new housing loans issued in May amounted to 578 million kroons and exceeded the results of previous months and also year-ago levels.

The quality of the loan portfolio worsened again in May over several months, as the stock of loans overdue for more than 60 days increased by 821 million kroons and constituted 7 per cent of the loan portfolio. The quality suffered primarily from loans issued to companies, in particular to the commercial real estate sector. Meanwhile, the stock of housing loans overdue for more than 60 days declined by 77 million kroons and accounted for 4.5 per cent of total housing loans.

The interest rates on long-term loans remained unchanged regardless of slight growth in the loan stock. The interest rates on new loans stood at the average level of the past twelve months: the average rates on long-term corporate loans and housing loans were 4.3 and 3.4 per cent respectively.

The stock of non-financial sector deposits grew further in May, which reflects prudent financial behaviour of companies and households. In May, corporate deposits increased by a total of 1.3 billion kroons to 57.7 billion kroons, over 10 per cent more than a year ago. The stock of household deposits remained virtually unchanged at 55.9 billion kroons. Considering the low deposit interest rates, households tend to invest increasingly less in time deposits. By the end of May, the share of time deposits had dropped to 56 per cent of total household deposits.