AS Balti Investeeringute Grupp (BIG) is the first in Estonia to grant loans to the extent of 100% of the value of immovable collateral, a move which will hopefully enable the company to grant 20% more loans and expand into new market segments.
"Reassured by our nine years' experience, about a fifth of the clients are interested in loans equalling to the total value of immovable collateral," said Ingo Põder, chairman of the management board of BIG.
According to Põder, risks arising from the overassessment of collateral property have been reduced mainly by high criteria for the selection of companies performing real estate appraisals.
"Given the shorter than average term of loans granted by BIG, it can be seen from calculations that even in a situation in which the price level of residential space would suddenly drop by 30%, the ratio of collateral value before the price drop to the loan balance will normalise for the company in nine months," added Põder.
84% of BIG's loan portfolio is formed by loans granted against immovable collateral. In Tallinn, the average sum of a loan against residential collateral is EEK 94,000 and in Tartu and Pärnu EEK 45,000.
According to Põder, statistics show that the percentage of bad loans among loans granted against residential collateral is very small.
In the first six months the current year, AS Balti Investeeringute Grupp posted a net profit exceeding EEK 2 million owing to the growth of the loan portfolio in Estonia as well as in Latvia. The year 2000 audited net profit of BIG exceeded EEK 5 million, which is three times more than in 1999.
AS Balti Investeeringute Grupp (BIG) is the greatest lender of money to private persons in the Baltic States after banks and leasing companies. BIG was founded in Tartu in 1992. In 1993 the company expanded to Tallinn and in 1994 to Pärnu. The first foreign branch was established in Riga in 1996. The name of the subsidiary is AS Vidzemes Kredits and its main areas of operation are similar to those of the parent company.
Further information:
Ingo Põder
Chairman of the management board of AS Balti Investeeringute Grupp
Tel. 07 441 950
