Growth in loans to households slowed in 2013 - corporate-loan growth picked up towards year-end

Releases Press release number 5 Thursday 13 February 2014, 12:00 PM
Growth in the stock of loans granted by Finnish MFIs to households slowed in 2013, in all use categories, in consumer credit, other loans, and especially in housing loans. Despite the slow-down, households’ loan stock continued to grow at a faster rate in Finland compared to the euro area average.

At the end of the year, the stock of housing loans stood at EUR 88 bn, ie 2.2% higher than a year earlier. The growth slow-down in housing loan stock reflects a general weakening of the economic situation. New drawdowns of housing loans were at their lowest in ten years. During the year, these drawdowns amounted to EUR 15 bn, which was a fifth less than a year earlier. The widening of margins on new housing loans came to a halt in early autumn and has since remained fairly stable. In December, the average interest rate on new housing loans was 2.03%, of which the interest margin accounted for 1.56 percentage points.

Growth in corporate loan stock accelerated in 2013. In the earlier part of the year, the growth was subdued, but towards the end of the year the growth rate picked up. The stock of loans to domestic non-financial corporations, including housing corporations, amounted to EUR 68 bn at year-end, 6.1% more than a year earlier. Loans to housing corporations accounted for about a quarter of total lending to non-financial corporations. The stock of loans to housing corporations grew considerably faster (13% pa on average) compared to the rest of the non-financial corporation sector. Growth in the stock of loans to non-financial corporations in Finland continues to outpace the euro area average. Non-financial corporations took out new loans mainly for working capital purposes and financing rearrangements. Non-financial corporations also raised more bond funding from the markets than in the previous year; in nominal terms, the stock of bonds issued by non-financial corporations was EUR 30 bn at year-end, ie 16% more than a year earlier. The average interest rate on new loans to non-financial corporations stood at 2.38% in December. Margins on loans to non-financial corporations widened during the year, particularly on small loans. In December, the average margin on new loans to non-financial corporations was 2.04%.

Households' deposits decreased slightly in 2013. Households are the most significant depositor sector, accounting for roughly half of the non-MFI deposit stock. At year-end, households held EUR 82 bn in bank deposits. Households’ deposits with agreed maturity showed a marked decline during the year; at year-end, they amounted to EUR 16 bn, or 18% less than a year earlier. Due to the low level of interest rates on deposits, households invested in other assets, such as investment funds and equities.  

At the end of 2013, the aggregated balance sheet of Finnish MFIs stood at EUR 525 bn, which was EUR 75 bn less than a year earlier. The first half of 2013 saw a continuation of the rapid contraction of the balance sheet that had begun in the summer of 2012. The contraction is connected with a reduction in credit institutions’ new deposits at the central bank and a decline in balance-sheet values of derivatives. The decrease in new central bank deposits reflects a stabilising of conditions in the financial markets, and the reduction in the balance sheet values of derivatives reflects increased use of central counterparty clearing and a decrease in market values of derivatives due to declining long-term interest rates.

This information is based on the Monetary Financial Statistics 2013 Annual Review published in Finnish today by the Bank of Finland. The English version of the Review will be published on 27 February 2014. 

For further information, please contact:
Essi Tamminen, Economist, essi.tamminen(at)bof.fi, tel. +358 10 831 2395,
Jaakko Suni, Economist, jaakko.suni(at)bof.fi, tel. +358 10 831 2454.