SEB: The small loan market is growing and debt distress is rare

Since 2015, the small loan market has shown a steady growth trend while problems with repayment are met less and less. An analysis of the small loans taken from SEB shows that in 2012 and the first quarter of 2016, 11 per cent and less than 3 per cent of clients, respectively, had problems with repayment.

According to Ainar Leppänen, Head of Retail Banking and Technology, this shows that people are encountering fewer problems when it comes to meeting their obligations, in particular, loan decisions have been thoroughly thought out and borrowing is responsible. “Our clients’ financial behaviour has become more stable. Planning has played its part, with actual needs and the financial situation taken into account, and where larger purchases are paid using savings accumulated over time or small loans taken after careful consideration.”

The small loan option is most actively taken advantage of by 20–30-year-old young people earning the average Estonian wage. The largest share, i.e., 20% of the total small loan portfolio, is taken up by consumption loans amounting to EUR 2000–4000.

Loans are normally taken to cover larger outlays. The results of SEB’s survey, published in September, shows that small loan are mostly used to buy a car or to renovate and furnish a home. A separate trend in the survey is a reflection of the property boom of the previous decade, since the houses and flats bought about ten year ago are in a need of a touch-up.

Ainar Leppänen adds: “It is only logical that young people in their most active period of their lives and families with small children are those that need temporary financial support the most. After the age of 40, the numbers of borrowers drops significantly and, as the years go by, people focus mainly on savings and securing their financial foundation.”

For more information:

Julia Piilmann
Communication Manager
Marketing and Communication Division
SEB Pank

Phone +372 665 5340
Address Tornimäe 2, 15010 Tallinn
E-mail julia.piilmann@seb.ee
www.seb.ee

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