Business financing at five-year high

In the first half of 2016 Latvia's banks lent close to €1b in business financing, which is at a five-year-high, the Commercial Banking Association (LKA) told the press Monday.

On June 30 the total loan portfolio in Latvia's private banks was €15.03b, an increase of 2.4% over the beginning of the year.

LKA said that lending has increased in the sectors of industry, agriculture, trade, real estate, electrical energy, gas, heat supply, as well as finance and insurance.

While construction lending dipped 30%, but on the flip side the number of late payments went down in this industry by 36%.

"In the next half year lending growth could be similar, and the total volume of credit could reach €2b," said LKA representative Kārlis Danēvičs.

"However it's not even half from the volume that the bank capacity allows for."

The association has set forth suggestions to foster lending in Latvia:

  • Exempting reinvested profit from corporate tax
  • Improving the application of financial instruments and guarantees
  • Promoting the development of public-private partnership projects
  • Adopting law amendments on real estate confiscation for public purposes and drafting a modern law on rent
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Economy
Economy