Data from the Bank of Estonia shows that banks earned €539 million in profit between January and September, an increase of approximately €42 million.

"The increase in profits was driven by growth in the loan portfolio and a rise in Euribor that boosted the interest income of the banks. Profits also benefited from a reduction in loan write-downs, which means that the banks put a lower estimate than before on their possible loan losses. The administration costs of the banks, particularly their staff costs, increased a little in contrast," the banks economist, Kristjan Mäe, wrote.

However, he said, the interest income of the banks has been growing notably faster than their interest expenses.

"The interest rates on long-term corporate loans and housing loans climbed by 0.5 percentage point over the year, while the average cost of funding for the banks rose by only 0.1 percentage point," Mäe said.

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