The SEB Baltic Household Outlook revealed that in 2015 the market for small loans and other loans issued by banks experienced an upturn in Estonia and Lithuania with the loan portfolios increasing by 1.8 per cent and 6.3 per cent respectively. In Latvia, however, the decline continued and the volume of the portfolio decreased 3.2 per cent.
“The reason behind the growth in Estonia and Lithuania is the low comparison basis, but also the improved financial situation of families as well as greater optimism about future income,” explained Mihkel Nestor, economic analyst at SEB Eesti.
According to the data of the Central Bank, in the first half of 2015 the volume of loans taken by Estonian families with the term of up to one year in the whole economy increased, but took a downturn in the third quarter, decreasing by two per cent. This indicated that the total growth of short-term loans is subsiding outside the banking sector.
The share of overdue consumer loans is still high Latvia – at the end of 2015 the share of loans in arrears for more than 90 days made up 12 per cent of the Latvian portfolio of consumer and other loans. By comparison, at the end of 2015, the proportion of loan payments in Estonia overdue by more than 60 days amounted to 2.2 per cent of the portfolio of consumer and other loans.
Who is an average small loan client?
Loans for larger consumption expenses are taken the most actively between 25 and 34 years of age and the least active are people aged 24 and under, whose share has decreased in all of the Baltic States. On average, in all the Baltic States the biggest small and other loans are taken by people aged 25–44: around EUR 3000 in Estonia; EUR 2900 in Latvia and EUR 2600 in Lithuania respectively. In Estonia the average sum decreased a bit in 2015, while in Lithuania it grew by 8 per cent and in Latvia by 11 per cent.
“Young people finance most of their expenses with a loan, presuming that their incomes will grow in the future. Those, who are a bit older, have enough savings to contribute more themselves. This pattern is also very similar in other European countries,” added Nestor.