The Lending Index of the Finance Latvia Association for the private customer segment shows that the 2018 index for individuals has grown nearly as fast as the previous year, whereas the desire and ability of the Latvian population to apply for loans have experienced its sharpest growth in the period of last three years. This is due to a positive impact created by the overall economic growth in the country, which, in turn, has increased the population’s financial stability and optimism. It must be noted, that Latvia’s inhabitants are still somewhat cautious of loans, and their ability to undertake credit agreement obligations is greater than their desire to borrow.

Presentation: Finance Latvia Association Lending Index for individuals (PDF)

According to the results of the index developed by the Finance Latvia Association, lending in the residential segment continued its climb in 2018, by rising from 104 points in 2017 to 107 index points last year. The growth was only slightly slower than the year before. As to the ability and willingness of individuals to borrow, it saw its fastest growth to date in 2018, with index scores reaching 123 points (+15 index points) and 111 points (+9). The substantial increase in both areas has been driven by both, steady economic growth, which is reflected in the growth of the gross domestic product, as well as the decrease in unemployment and wage growth.

“Last year’s impact of wealth and income growth on the population’s financial stability and overall sentiment is demonstrated not only by statistics but also by the increase in the demand for loans. Although credit conditions for individuals have not changed significantly over the previous year, the number of potential borrowers, who, for instance, wished to purchase housing through a loan, has steadily grown. Certain measures implemented by the state undoubtedly played an important role in this as well: for example, ALTUM programme of support for the purchase of housing was expanded in 2018, which made soft mortgages accessible not only to families with children but also to young professionals,”

– Ainars Balcers, Co-Chair of Finance Latvia Association’s Credit Committee and Head of Swedbank Baltic division’s Mortgage Support Department, explains.

He also points out that, despite the growing wish to borrow, citizens increasingly weigh their options and decisions to borrow a loan by assessing its long-term impact on the household budget. This confirms that public awareness of responsible borrowing has substantially improved.

The Finance Latvia Association’s Lending Index for the private customer segment shows that the year 2018 also brought changes to the financial sector. The ability of commercial banks to provide loans decreased by 8 index points last year, as a result of both, structural changes in the banking sector and changes in the business strategies of individual banks, leading to a decrease in bank deposits. However, the willingness to risk and the requirements for individuals have not changed during the previous year, therefore, the willingness to provide credit will remain relatively unchanged.

“Overall, it can be concluded that the credit environment for the private customer segment has shown a healthy potential over the last year, but in certain areas, such as student and academic loans, trends indicate the need for improvement,”

– Ainars Balcers explains.

The Finance Latvia Association evaluates the credit market as a whole as well as all its segments separately and cooperates with non-government sector partners to improve and promote a favorable credit environment. Last year, a proposal for improving the system of student and academic loans was also developed.

“The portfolio of student and academic loans issued at the end of the last year amounted to approximately 64 million euros, which is rather modest compared to, let’s say, the volume of consumer loans for young, university-age people. According to a student survey, 50% of students have considered a student loan at some point as a means of covering their academic or daily costs. At the same time, almost half of them did not even apply for this type of financial support, partially due to an inability to find a private guarantor. This suggests the necessity to improve the system of student and academic loans, making it more understandable and efficient so that higher education in Latvia would be accessible to anyone willing to study,”

– Kārlis Danēvičs, co-chairman of the Finance Latvia Association’s Credit committee and SEB bank board member, explains.

The Finance Latvia Association’s Lending Index for the private customer segment is a unique and complex measurement, which defines both, the Latvian population’s ability and willingness to borrow, and the banking sector’s ability and willingness to lend. The index analyses a total of 14 different indicators, such as late payment, changes in unemployment, the share of the shadow economy, the banking sector’s financial data, consumer sentiment, etc. Thus, it provides a full account of the complexity of credit as the driving engine of the economy. The Finance Latvia Association developed the index in cooperation with a number of Latvia’s leading economics and credit experts and by analyzing the best international practice examples.


About Finance Latvia Association

The Finance Latvia Association is a public body which represents Latvia’s companies in financial, technological and other relevant industries, nationally and internationally.
The Finance Latvia Association comprises the majority of the financial industry companies, including companies in tech and other relevant industries.

On 12 July 2018, during the Finance Latvia Association members meeting, it was decided to rename the association, which was formerly called Latvia’s Commercial Bank Association, as the Finance Latvia Association.

The vision of the Finance Latvia Association
– Latvia’s financial sector serving as an example of cooperation and innovation for Europe.
The main principles and values of the association’s activities are openness, accountability, and cooperation, to form a single platform for meaningful discussions on topical issues.

The association’s main lines of action:

  • development – to promote further development of the Latvian financial sector by focusing on both, rendering a wide range of innovative services with a high added value accessible, and promoting competitiveness in the European Single Market;
  • technology – to position Latvia as the leading provider of open financial services through innovative digital services in the EU;
  • compliance – to promote the implementation of the highest compliance standards.

Contact: Kristīne Mennika, Head of Strategic Communication of the Finance Latvia Association +371 2652 8533,

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