Analytics, Banks, Loan, Statistics
International Internet Magazine. Baltic States news & analytics
Thursday, 28.03.2024, 18:41
Revival of lending remains slow
In June, the annual rate of decrease in the domestic loan portfolio
improved to reach –2.9%; excluding the transfer of part of the loan
portfolio of Nordea Bank Finland Plc to its parent bank outside Latvia, the
domestic loan portfolio grew by 1.5% year-on-year. The annual decrease ratio of
the loan portfolio of non-financial corporations reached –9.3% (excluding the
above impact, the ratio amounted to –0.3%), while the annual rate of change in
the household loan portfolio stood at –0.4%. In June, new loansto
non-financial corporations reached almost double the volume recorded in June of
the previous year. Meanwhile, new loans to households exceeded the indicators
of the corresponding period of the previous year for the third consecutive
month, while lagging behind the level observed in May 2018.
In June, domestic bank deposits grew by 0.5%, with deposits of
non-financial corporations shrinking by 0.5% and household deposits increasing
by 1.9%; consequently, the annual rate of growth stood at 1.3% and 8.9%
respectively.
Latvia's contribution to the monetary aggregate M3 of the euro area expanded
by 0.4% in June, with its annual growth rate standing at 5.1%. Within a month,
overnight deposits of euro area residents with Latvia's monetary financial
institutions grew by 0.8%, deposits redeemable at notice increased by 0.3%,
while deposits with an agreed maturity of up to 2 years declined by 3.2%.
As expected, the revival of lending to households continues,
albeit at a very moderate pace which is likely to be subdued in the
future as well. Uncertainty surrounding the corporate lending growth forecasts
persists, since granting individual large loans in some months, e.g. in June,
may expand the portfolio, whereas their settling may reduce it respectively.
The results of the bank lending survey conducted at the end of June do not
provide clarity either: three of the four surveyed banks believe that the
demand for loans to enterprises will expand slightly in the third quarter, only
two banks expect an increased demand for loans for house purchase, whereas one
bank expects a higher demand for consumer credit.