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Estonian banking faces biggest possible risks from Nordic countries: regulator

Xinhua, December 31, 2016 Adjust font size:

External environment, primarily the fast loan growth and real estate price increases in Nordic countries, is believed to pose the biggest possible risks to Estonian banking, the local media reported on Friday.

The Estonian banking market would be impacted if the risks of the Swedish market were realized, as Swedish banking groups make up a significant part of Estonia's local banking market, the Estonian Financial Supervision Authority (EFSA) was quoted as saying in a statement.

The risks are defused by banks' solid equity reserves, the regulator added.

Estonian banks and bank branches earned 81 million euros (about 85 million U.S. dollars) of profit in the third quarter of 2016, 9 percent down from the second quarter, said the EFSA.

Interest income increased by 3.5 percent and service fee income by 0.4 percent quarter-on-quarter, while the expenditure-income ratio showed a modest rise to 48.3 percent, it noted.

Yearly growth in Estonian banks' loan portfolio slowed down from 11.7 percent to 9.4 percent in the third quarter, while the growth in household loans accelerated from 4.4 percent to 4.6 percent.

The banks' return on equity remained at 12 percent during the period under review, approximately twice as high as the average for EU banks, which was 5.7 percent in the second quarter of 2016 as listed by the European Banking Authority. Enditem