Latvia's Economic Response to Covid-19
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)
8%
Loans to domestic households and NFCs stood at 34% of GDP in
December 2020, down from almost 100% at the outset of the global
financial crisis
6%
4%
•
Lending had been subdued before Covid-19 outbreak and is expected to
remain in negative territory
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 have been limiting growth in credit risk in the
short term
-2%
-4%
-6%
2%
0%
2012
2013
2014
2015
2016
2017
2018
2019
2020
NFCs
HHs
20%
15%
10%
5%
Total Loan Portfolio Quality
0%
2011
2012
2013
2014
2015 2016
Share of loan loss provisions in outstanding loans
Share of loans over 90 days past due in outstanding loans
2017
2018
2019
2020
Source: FCMC, Credit Register
16
-8%
Source: ECB
149.1
*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
195.2
■2011 Q4
■ 2020 Q4
137.9
95.3
73.8
61.9
(%)
112.6
89.5
Estonia
Latvia
Lithuania
Euro Area
Source: ECBView entire presentation