The credit indicator C2, February 2009

Non-financial enterprises’ gross domestic debt amounted to NOK 1 217 billion at end-February. The twelve-month growth to end-February was 13.2 per cent, down from 14.6 per cent in the previous month. Annualised one-month growth for February was only 2 per cent, compared with 16.9 per cent for January.

Converted to annual growth rate, the non-financial gross debt for the period December-February increased by 8.8 per cent compared with the three previous months. One month earlier this growth rate was 10.5 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 1 883 billion at end-February. The twelve-month growth continued to fall this month to 6.7 per cent, compared with 6.8 per cent to end-January. 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 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 3 336 billion at end-February, of which 64.0 per cent consisted of bank loans. The twelve-month growth in bank loans decreased from 1.8 per cent to end-January to -0.2 per cent to end-February, while the twelve-month growth in credit from mortgage companies increased from 56.5 per cent to 63.1 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 9.3 per cent to end-February, compared to 10.1 per cent the previous month.

After a weak and gradually negative growth rate in bond debt throughout 2008, the twelve-month growth rate increased from -1.5 per cent to end-January to 5.1 per cent to end-February. This was the highest twelve-month growth since October 2007. The growth rate in certificate debt decreased from 60.4 per cent to end-January to 53 per cent to end-February.