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PRESS RELEASE: Proportion of Companies with High Credit Risk at Three-year Low

5. Oct 2018

The latest AS Creditinfo Estonia statistics on companies’ payment behaviour reveal that companies with high credit risk formed 10.5% of the sample in the first half of 2018. The proportion of companies with high credit risk is at its lowest level year-on-year since 2015.

In comparison, the respective indicator was over 30% during the economic recession and near 20% during the boom. This provides food for thought: are we witnessing stagnation and general unwillingness to take risks?” asks Creditinfo Estonia’s Head Analyst Anne-Ly Ots when commenting on the drop in the number of companies with high credit risk.

Figure: The proportion of companies with high credit risk in the first half of the year (2008-2018)

The study reveals hospitality and catering (20.9%) and construction (15.6%) as sectors with the highest risk level. These sectors also have the highest number of companies with payment defaults – every 18th company failed to meet their obligations. The highest absolute amount of payment defaults was in construction: 6.1 million euros.

The proportion of companies with tax arrears was again the highest in the construction, hospitality and catering sectors, where every 10th company had tax arrears. Industry came first in the ranking of total tax arrears with 11.2 million euros.

The study shows that fields that are related to skilled trades and research and technology (5.5%) have the lowest risk level, and the field of activity with the lowest level of tax arrears is information and communication. In the first half of 2018, the proportion of tax arrears was the lowest in finance and insurance.

According to Creditinfo Estonia Head Analyst Anne-Ly Ots, the recent trends have been stable when it comes to companies with debt. Even though the aggregate debt is growing as expected, the number of companies with debt is constantly decreasing. The percentage of active companies with debt was 6.8% and the debtors’ total debt formed 0.1% of the turnover of the whole sample*. The total number of companies with debt was 5,708 – every 15th active company had debt.

The average debt was 2,695 euros and the aggregate amount of payment defaults and tax arrears reached million euros in the first half of 2018.

The full study can be viewed on the Creditinfo website: Payment Behaviour of Companies in First Half of 2018. 

In conclusion, it can be pointed out that companies’ payment behaviour in Estonia is generally very good and the number of tax arrears relatively low.

* Sample size: 84,329 companies in the first half of 2018