The credit indicator C2, April 2009

Non-financial enterprises’ gross domestic debt amounted to NOK 1 211 billion at end-April. The twelve-month growth to end-April was 9.2 per cent, down from 11 per cent in the previous month. Seasonally-adjusted annualised one-month growth for April was -1.5 per cent. This is the second month with a negative one-month growth.

The growth based on the three-month moving average¹ to the non-financial gross debt was 3.1 per cent for the period February-April compared with the three previous months. This was the lowest growth rate since June 2004. 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.

Lower growth in household debt

Household gross domestic debt totalled NOK 1 905 billion at end-April. The twelve-month growth was 6.6 per cent, down from 6.7 per cent to the previous month. 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 recent 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 3 353 billion at end-April, of which almost two thirds consisted of bank loans. The twelve-month growth in bank loans decreased from -1.6 per cent to end-March to -1.7 per cent to end-April. Mortgage companies’ loans also declined and the twelve-month growth decreased from 64.7 per cent to 56.8 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 7.6 per cent to end-April, compared to 8.5 per cent the previous month.

The twelve-month growth rate in bond debt continued to rise from 9.1 per cent to end-March to 11.3 per cent to end-April. This was the highest twelve-month growth since July 2007. The growth rate in certificate debt went down from 55.4 per cent to end-March to 38.4 per cent to end-April.

¹Growth based on the three-month moving average is defined as growth in average outstanding credit (seasonally-adjusted figures) in the latest three-month period in relation to the previous three-month period adjusted for exchange rate valuation changes and statistical breaks as an annualised figure. The calculation is centred, i.e. the observation is set at the middle month of the latest three-month period.