Analytics, Banks, Financial Services, Latvia, Loan
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Wednesday, 17.04.2024, 22:11
Loan Index shows growing lending willingness of Latvian banks in 2017
At the same time, willingness of borrowers to borrow grew eight percentage points (107.2 percentage points) and their borrowing ability improved seven percentage points (108.73 percentage points) while lending ability of banks decreased somewhat - by five percentage points (95.81 percentage points) due to structural changes in the sector.
The overall Loan Index in 2017 reached 106 percentage points, growing six
percentage points from 2016.
The index seeks to counter the assumption that lending ability of banks
depends on subjective reasons, said Karlis
Danevics, a board member of SEB Banka and the co-chairman of the banking
association's lending committee.
The actual situation is far more complicated, he said. Although resident
deposits at banks are growing, the amount of non-resident deposits is
declining, and the number of non-paying borrowers also has negative effects on
lending ability of banks.
As regards borrowing willingness, it depends largely on the economic
sentiment because companies and individuals take loans mainly when they are
confident about the future, Danevics said.
Considering the general economic trends and growing lending willingness of
banks, growth in lending can be expected in the future, he said.
The Loan Index by the Latvian Association of Commercial Banks is based on
16 different indicators from overdue loans and financial performance of the
banking sector to changes in the unemployment rate, the share of the shadow
economy, consumer sentiment etc.