Portrait of an Ascending Sovereign Credit
Lending remains subdued
The recovery in growth of loan portfolio is to be delayed due to Covid-19 outbreak and decline in the economic activity
Key Highlights
Loans to Domestic Clients
(yoy)
•
Loans to domestic households and NFCs stood at 34% of GDP in June 2020,
down from almost 100% at the outset of the global financial crisis
8%
6%
.
Lending had been subdued before Covid-19 outbreak and is expected to
remain in negative territory
4%
•
•
The impact of Covid-19 on the economy has not been reflected in the overall
quality of bank loan portfolio yet; the coverage ratio of 90 days overdue
loans remained high. Government support measures and the private loan
moratorium are limiting growth in credit risk in the short term
To facilitate continuation of prudent consumer and mortgage lending practice
by banks in the longer term, the overall LTV restrictions of 90% (95% for
participants of guarantee program) are supplemented with a DTI X6, DSTI
40%, maturity cap for mortgage 30Y and for other loans 7Y, LTV 70% for
buy-to-let mortgages (effective from July 2020)
Total Loan Portfolio Quality
-6%
-8%
Source: ECB
why
2%
0%
2012
2013
2014
2015
2016
2017
2018
2019
2020
-2%
-4%
NFCs
HHs
*The time series have been adjusted excluding the one-off effects of loan write-offs,
exchange rate fluctuations, reclassification, etc.
Domestic Loan-to-Deposit Ratio
(%)
20%
15%
10%
5%
0%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Share of loan loss provisions in outstanding loans
Share of loans over 90 days past due in outstanding loans
Source: FCMC, Credit Register
16
161.5
184.9
141.1
99.9
82.4
73.2
2011 Q2
■ 2020 Q2
113.8
91.8
Estonia
Latvia
Lithuania
Euro Area
Source: ECBView entire presentation