Central Bank of Estonia reports loan portfolio up more than 8% to EUR 30 billion, first half bank profit steady at EUR 356 million

The Central Bank of Estonia published a statistical release on banks and lease companies showing that the portfolio of corporate and household loans issued by banks operating in Estonia rose by more than 8% year on year to EUR 30 billion by the end of June. Lending growth was more than twice the euro area average, with the release pointing to continued bank lending capacity and stronger willingness by households and companies to invest. Housing loans remained the main driver, with loan stock growth of nearly 10%. Other household loans and leases also increased, though at a slower 2%. The corporate loan portfolio grew 8% over the year, led mainly by real estate, agriculture and forestry, while lending to industrial companies also accelerated to close to 8%. Activity was more subdued in retail and logistics, where loan portfolios were around unchanged from a year earlier. Banks operating in Estonia earned EUR 356 million in net profit on the local market in the first half of the year, broadly unchanged from a year earlier. A larger loan book and higher Euribor lifted interest income, while interest costs remained similar to last year, but administrative costs, mainly personnel expenses, increased and loan write-downs were higher even as overall loan quality remained good. The release said the recent full pass-through of higher Euribor into interest income, together with continued loan growth, will support profitability in the coming quarters.