SEB: Families’ ability to cope with unexpected expenses improving

The SEB Baltic Household Outlook reveals that an improved situation on the labour markets of the three countries and increasing incomes grew both families’ cash buffers and their interest in purchasing new homes.

Household incomes increased in all three Baltic States. In 2015, mean real wages (net wages adjusted for inflation) grew 6.9 per cent in Estonia, 7.4 per cent in Latvia and 6 per cent in Lithuania. Although household expenses also increased, families continued to grow their savings. Household deposits grew 7.4 per cent in Estonia, 6.3 per cent in Latvia and 7.9 per cent in Lithuania.

“Growth in deposits is a sign that families’ ability to cope with unexpected expenses is gradually improving. This is also supported by the pan-European Statistics on Income and Living Conditions, according to which the numbers of those households unable to financially handle unexpected events decreased in 2015 from 39 per cent to 37 per cent in Estonia, from 67 per cent to 60 per cent in Latvia, and from 55 per cent to 53 per cent in Lithuania,” noted Mihkel Nestor, Economic Analyst at SEB Estonia.

Interest in home loans growing in the Baltic States

The volume of new home loans issued by commercial banks in 2015, as compared to 2014, was 15 per cent higher in Estonia, 9 per cent higher in Latvia and 21 per cent higher in Lithuania.

“The volumes of new home loans are mostly at pre-boom levels, which shows that this growth is driven by low base values and that the volumes are still relatively modest at the moment. When making borrowing decisions today, people are much more careful, since they still remember the difficulties with loan repayments that resulted from the economic crisis,” Nestor said.

Card payments continue to enjoy the highest popularity in Estonia

Since 2011, the turnover of retail sales by mail order or online has doubled or nearly trebled, with the use of cashless payment methods growing along with that. The share of purchases completed with bank cards in 2015, as compared to 2014, grew by 17.5 per cent in Lithuania, 17 per cent in Latvia and 6.5 per cent in Estonia.

“Although the use of bank cards has grown significantly in Latvia and Lithuania in recent years, Estonia is nevertheless several years ahead of its neighbours to the south. In 2015, shops recorded an average 141 payments per Estonian bank card – 60 per cent more than in Latvia and double the number in Lithuania,” Nestor added.

For more information:

Maarja Gavronski
Project Manager for Communication
Marketing and Communications Division
SEB Pank

Phone +372 665 5270
Mobile +372 5656 5785
Address Tornimäe 2, 15010 Tallinn
E-mail maarja.gavronski@seb.ee
www.seb.ee

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