Latvian central bank not upbeat about lending growth prospects

December 31, 2014 10:27 am 

RIGA, Dec. 31 — Prospects for lending growth in Latvia are not optimistic, Bank of Latvia economist Vilnis Purvins admitted in a commentary on the central bank's analytical website.

"Even though the loan portfolio shrank minimally in November, the outlook for any further growth in lending in the near future is not optimistic," said Purvins.

The central bank's economist said that the 0.1 percent contraction of the banks' aggregate domestic loan portfolio in November was primarily the result of writing off or re-classification of loans, whereas the balance of loans made to non-financial institutions increased by 0.1 percent and housing loans shrank slower than in October — by a mere 0.3 percent.

The rate of annual decrease in loans was 5.5 percent in November, including a 6.7 percent reduction in loans granted to non-financial corporations, a 7.2 percent drop in housing loans and a 4.1 percent decrease in consumer loans.

"Geopolitical tensions and the uncertainty related to the drop in the exchange rate of the Russian rouble with respect to export possibilities not only to Russia but also to its other trading partners, including EU countries, are the most important of the factors that next year will limit any material recovery in lending, " the Bank of Latvia economist said.

At the end of November the Latvian banks' aggregate domestic loan portfolio was worth 12.86 billion euros, according to the Bank of Latvia. (PNA/Xinhua)

LGI/JSD

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