The Central Bank of Estonia published a third-quarter overview showing that banks operating in Estonia earned EUR 138 million of net profit in the local market, 26% less than a year earlier. The decline was attributed mainly to a fall in Euribor, which reduced interest income on loans faster than banks’ own funding costs adjusted, bringing profitability to 1.2% of assets, close to the ten-year average. Despite weaker interest income, profits were supported by continued loan growth. By late September, outstanding housing loans were around 10% higher year on year and corporate loans 9% higher, compared with an average of 2% growth for both categories across the euro area. Corporate borrowing growth was driven mainly by real estate and by professional, scientific and technical activities (including head office activities), with outstanding loans rising well over 10% in both sectors; most other larger sectors saw growth of at least 5%, while the trade sector fell 3%. The share of problematic loans has stopped rising over the past six months and remains low versus the past ten years. Euribor has been broadly stable since spring and financial markets expect rates to stay close to current levels for the next few years, implying bank profits may stabilise over coming quarters and become more dependent on loan portfolio growth.
Central Bank of Estonia 2025-10-27
Central Bank of Estonia reports third quarter bank net profit down to EUR 138 million as falling Euribor compresses interest income
The Central Bank of Estonia reported a 26% year-on-year decline in third-quarter net profits for banks operating in Estonia, totaling EUR 138 million, primarily due to reduced interest income from a fall in Euribor. Despite this, loan growth supported profits, with housing loans up 10% and corporate loans up 9% year-on-year, driven by real estate and professional sectors. The share of problematic loans has stabilized, and with Euribor expected to remain stable, future bank profits may rely more on loan growth.