The financial assets of Estonian residents approached 11 billion euros in the first half of the year
The recent review published by the Financial Supervision Authority of the financial services market shows continuing growth in the first half of this year in the volumes of most financial services in the Estonian market. The growth in financial services aimed at savings and investment was quite modest, but loan liabilities, including services to fund consumption, increased strongly.
Providers of financial services in the Estonian market have been adapting their activities to meet the additional requirements in the European Union legislation that will come into force during the coming year, including the updated Markets in Financial Instruments Directive, the Payment Services Directive, and the Insurance Intermediation Directive, and implementing legislation. The additional requirements are intended to make the provision of financial services more comprehensible for consumers, increasing substantially the due diligence requirements for service providers at the same time.
The focus of the Financial Supervision Authority continues to be on ensuring the legal basis of the provision of financial services in Estonia. “We can see that the increase in wealth that has followed from the growth in the economy has attracted fraudsters who try to trick people out of their money with illegal financial services”, said Andre Nõmm, a member of the management board of the Financial Supervision Authority. “We encourage consumers to make sure where possible and to ask advice if necessary about whether a provider of financial services has the appropriate activity licence or not”.
The review by the Financial Supervision Authority shows the development trends in the market for financial services in Estonia were similar in the first half of this year to what they were last year, as the volume of most financial services increased and services funding consumption again increased strongly.
The stock of deposits held by banks in Estonia grew by 1.5% in the first half of this year, or 248 million euros, to 16.6 billion euros by the end of June. The growth was seen in demand deposits and overnight deposits, mainly because interest rates remain low. For the same reason, the stock of term deposits and savings deposits declined by 133 million euros to 3.3 billion euros.
The assets invested in financial services aimed at savings and investment, which includes investment funds and pension funds, individual portfolios, term and savings deposits, and investment and other deposits, increased by 2% to 10.2 billion euros by the end of June. There was growth of 3% over the half year in funds held on current accounts to 13.3 billion euros at the end of June.
The consolidated stock of the loan portfolios of the banks increased in the first half year by 2.4%, or 425 million euros, to 18.2 billion euros. The consolidated stock of the loan portfolio of creditors, which came under the supervision of the Financial Supervision Authority in March last year, grew in the same period by 7.1% or 53 million euros to 0.8 billion euros.
Insurance premiums paid for life insurance increased by 7%, and those for non-life insurance by 11%. The largest part of the growth in insurance premiums came from the unit-linked life insurance premiums, while the volume of premiums for whole life insurance also increased. The biggest growth in non-life insurance was in premiums for traffic insurance, land vehicle insurance, and possessions insurance.
The financial assets of private Estonian residents were again larger than their liabilities, as their financial assets at the end of June 2017 stood at 10.8 billion euros, while the stock of financial liabilities was 8.6 billion euros, these figures a year earlier having been 9.7 billion and 8.1 billion. It is also notable that financial assets grew faster than financial liabilities, as consolidated financial assets increased by 6% and consolidated liabilities by 3%. This meant that net financial assets totalled 2.2 billion euros at the end of June. The average private resident of Estonia had financial assets at the end of June of 8197 euros, and outstanding loans of 6550 euros. This gave the average private resident net financial assets of 1648 euros.
The review is available on the website of the Financial Supervision Authority.
The Financial Supervision Authority publishes a review of the market for financial services in Estonia twice a year, and bases it on data submitted by financial companies.