Estonian commercial banks are experiencing steady financial growth, with a reported €368 million profit for the first quarter of 2025. This marks a notable increase from the fourth quarter of 2024 but falls slightly short of the €444 million profit from the same period in 2024.
In the first quarter of 2025, banks in Estonia have made a combined profit of €368 million, an impressive increase from the €291 million reported in the fourth quarter of the previous year. However, it’s a dip compared to the same period last year when profits were higher at €444 million. This year-on-year decline highlights some of the broader trends in the Estonian banking sector, though the figures remain strong.
According to data released by Eesti Pank, the country’s central bank, Estonia’s total balance sheet volume was recorded at €44.8 billion by the end of March 2025. This figure reflects a modest decrease of 1.1% or €489 million compared to February 2025, though it still shows an annual growth of 6.1% or €2.6 billion.
This shift indicates that while there may be a slight month-to-month dip, Estonian banks continue to thrive when measured against last year’s performance. The balance sheet data paints a picture of continued health in the financial sector, with growth outpacing losses and trends appearing overall favorable.
Deposits and Housing Loans on the Rise
The volume of deposits in Estonian banks also saw growth, with total deposits reaching €31.5 billion by March 2025. Compared to February, deposits increased by €345 million, and the year-over-year growth was an impressive €1.9 billion. Notably, 15% of total deposits came from nonresident accounts, marking a €268 million increase compared to March 2024.
The largest portion of deposits, €7.5 billion, was held in term deposits from both resident households and businesses. This represents a 5% increase from the previous year, signaling confidence in longer-term savings and investments.
On the lending front, the housing market saw a solid boost with a total of €186 million in housing loans issued in March. This figure represents an 11% increase from the previous month and a 32% rise when compared to the same month last year. It suggests a strong demand for real estate financing and an expanding market for homebuyers in Estonia.
Interestingly, car leasing transactions also rose by 49%, reaching €18 million in March compared to February. However, this was still down by 38% compared to March 2024, reflecting a potentially temporary dip in the automotive leasing sector.
Business Loans Surge in the Early Months of 2025
The business loan sector showed impressive growth as well. Long-term loans and leases issued to businesses surged by 79% month-on-month, totaling €462 million in March 2025. When compared to the same month in 2024, this represented a 45% increase.
This remarkable rise in business lending suggests strong optimism among Estonian businesses, with many likely turning to financing for expansion and investment in light of an evolving economic environment. The surge in business loans could be linked to the post-pandemic recovery phase and the current government incentives for entrepreneurship and innovation.
The Big Picture: A Balanced Financial Landscape
Overall, the financial landscape in Estonia looks positive despite some fluctuations. The continued growth in deposits, alongside the sharp increase in business loans, speaks to a healthy economic environment where individuals and corporations are confident in their financial outlooks. While profits slightly fell year-on-year, the quarter-on-quarter growth shows banks’ ability to recover quickly after a more challenging period.
The growth in deposits and lending points to a stabilizing economy, bolstered by strategic government policies, consumer confidence, and growing business activity. However, as always, the broader global financial situation could pose challenges that might affect Estonia’s banking results in the coming months. Monitoring future reports from Eesti Pank will offer a clearer picture of whether these trends will continue or whether new challenges will arise.
