The credit indicator C2, December 2008

Non-financial enterprises’ gross domestic debt amounted to NOK 1 208 billion at end-December. The twelve-month growth to end-December was 14.8 per cent, down from 17.4 per cent in the previous month. Annualised one-month growth for December was -1.2 per cent. This was the lowest one-month growth since March 2004.

Converted to annual growth rate, the non-financial gross debt for the period October-December increased by 11.3 per cent compared with the three previous months. One month earlier this growth rate was 13.2 per cent. The fact that the growth based on the three-month moving average is lower than the twelve-month growth indicates that the twelve-month growth will continue to fall.

Declining growth in household debt

Household gross domestic debt totalled NOK 1 869 billion at end-December. The twelve-month growth continued to fall this month to 7.1 per cent, compared with 7.3 per cent to end-November. This was the lowest twelve-month growth since September 1999. The average annual growth in household gross domestic debt in the twelve months of 2008 was 9.7 per cent, compared to 11.9 per cent in 2007.

Contributing factors to the high growth rates

The changed economic prospects have contributed to a dampening of the demand for new loans during the last few months. In addition, the financial crisis has led to a sharpening of the financial corporations’ credit practice. In the long term, this will contribute to a reduction in the debt growth rates. In the evaluation of the growth rates in relation to C2, however, it should be noted that when an investment decision has been taken and a possible loan commitment is given there will always be a certain delay before this is included in actual debt data. It is not unlikely that in a situation with tight liquidity, customers draw on their credit lines to a greater extent than before, which also contributes to high debt figures.

Growth rates affected by the financial crisis

The general public’s gross domestic debt C2 amounted to NOK 3 302 billion at end-December, of which almost 66 per cent consists of bank loans. The twelve-month growth in bank loans decreased from 3.1 per cent to end-November to 2.3 per cent to end-December, and the twelve-month growth in credit from mortgage companies fell from 64.4 per cent to 58.2 per cent in the same period.

The growth rates are affected by transfers of loans from banks to mortgage companies. This is due to the new legislation on covered bonds. The growth rate for banks and mortgage companies in total was 10.5 per cent to end-December, compared to 11.7 per cent the previous month.

The twelve-month growth rates in bond debt were weak throughout 2008 (- 4.2 per cent to end-December). This can be related to the financial crisis. However, the growth rate in certificate debt has increased in recent months, and amounted to 64.6 per cent to the end of 2008.