The loan portfolio of consumer loans and other loans is decreasing in each of the Baltic States, with hire purchase being preferred in Estonia and Lithuania

In 2014, both the repayments and write-offs of small loans exceeded the volume of new loans in each of the Baltic States, reveals the new SEB Baltic Household Outlook.

At the end of 2014, the volume of consumer loans and other loans was 8.9 per cent lower in Latvia, 7.3 per cent lower in Lithuania, and 2 per cent lower in Estonia than last year. In the course of 2013, the portfolio decreased by 11 per cent in Latvia, 3.2 per cent in Lithuania, and 4.6 per cent in Estonia. The decrease in the volume of loans is decelerating, but turning to growth is not foreseen at this time.

The share of non-performing consumer loans is still the highest in Latvia – at the end of 2014 the share of loans in arrears for more than 60 days made up 14 per cent of the Latvian portfolio of consumer loans and other loans, while in Estonia the figure was 3.6 per cent and, in June 2014 in Lithuania, 11 per cent.

“Families do not seem to be eager to finance their consumer habits with a bank loan. In Estonia, consumer loans have been replaced with hire purchase, which seems to be a convenient and practical solution to pay for bigger purchases. There are no specific statistics available to assess the volume of hire purchase contracts. The national accounts reveal that the volume of loans with a term of up to one year and issued outside of financial institutions grew by more than 30% in 2014. These loans include both instant loans as well as hire purchase,” noted Triin Messimas, financial expert at SEB Estonia.

According to the market overview of consumer loans by the Bank of Lithuania, the volume of consumer loans taken from non-financial institutions grew 17 per cent in 2014, when compared to the previous year. In Latvia, conversely, the total loan obligation of households before non-financial institutions is decreasing, which means that loan providers from outside the banking sector are not replacing bank loans in Latvia.

The full Baltic Household Outlook can be read in English, here: www.seb.ee/BHO_aprill_2015


Additional information:

Triin Messimas, financial expert at SEB Estonia +372 66 55 167, triin.messimas@seb.ee
Evelin Allas, SEB Estonia Communications Manager +372 66 55 649, +372 51 11 718, evelin.allas@seb.ee