The credit indicator C2, January 2009

Non-financial enterprises’ gross domestic debt amounted to NOK 1 204 billion at end-January. The twelve-month growth to end-January was 14.1 per cent, down from 14.9 per cent in the previous month.

Converted to annual growth rate, the non-financial gross debt for the period November-January increased by 9.9 per cent compared with the three previous months. One month earlier this growth rate was 10.0 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. However, annualised one-month growth for January was 11.4 per cent, compared with 1.7 per cent for December.

Declining growth in household debt

Household gross domestic debt totalled NOK 1 872 billion at end-January. The twelve-month growth continued to fall this month to 6.8 per cent, compared with 7.1 per cent to end-December. This was the lowest twelve-month growth since August 1999.

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 3 309 billion at end-January, of which 65.0 per cent consists of bank loans. The twelve-month growth in bank loans decreased from 2.3 per cent to end-December to 1.8 per cent to end-January, and the twelve-month growth in credit from mortgage companies fell from 58.1 per cent to 55.2 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 9.9 per cent to end-January, compared to 10.5 per cent the previous month.

The twelve-month growth rate in bond debt were weak throughout 2008 (- 4.2 per cent to end-December). To end-January the growth rate was - 1.5 per cent. However, the growth rate in certificate debt has increased in recent months, and amounted to 60.4 per cent to the end of January.