Banking statistics for December 2024

New consumer credit disbursements reached CZK 9.3 billion in December, the lowest volume in the past year, which is normally characterised by monthly volumes of around CZK 12 billion, and well above the averages of the previous four years. The persistently low default rates on consumer loans to the population do not suggest that households that are clients of banks are having serious repayment difficulties (rates and default rates tend to be higher for non-bank providers, given the riskiness of the tribe, as do default rates). The share of non-performing loans in this category fell by three hundredths of a percentage point month-on-month from 4.16%, a very good figure in international comparison.

The interest rate on consumer loans not secured by real estate or other collateral is higher relative to risk than, for example, secured mortgage loans, with the interest rate on new business at 8.7% in December.

Last year was mainly marked by a significant recovery in interest in mortgage lending, despite the higher level of interest rates compared to four or five years ago, the annual outstanding volume of loans in this category rose by 4.84% to CZK 1.720 trillion. Homebuyers are clearly beginning to weigh up expectations of a slow decline in interest rates against the faster expected growth in house prices, due to the still insufficient supply: postponing the transaction is thus not seen as advantageous in terms of future affordability, even when anticipating future growth in real incomes. This combination of factors explains why, according to the CBA's Hypomonitor, based on its own data collection from member banks (and therefore slightly different values compared to the CNB's banking statistics), the year-on-year increase in new business volume rose from CZK 12.7bn to CZK 19.75bn in December 2024, with interest rates falling to 4.80% compared to 5.65% a year ago.

Compared to most EU countries, the Czech Republic has an outstanding payment record, especially in mortgage repayments; the share of non-performing mortgages has been stable at 0.6% over the past year, making it one of the lowest in the EU.

If we look at the evolution of corporate loan balances, we see a very interesting evolution by type of business. While publicly owned enterprises recorded a high annual increase of 17.6%, private companies owned by domestic capital recorded a 5.6% annual increase, while those under foreign control only reached 1.9%.

The volume of new CZK-denominated business fell month-on-month from CZK 31 billion to CZK 28 billion, but on the contrary, euro-denominated loans rose very strongly from November's CZK 28 billion to December's CZK 51 billion. At the same time, the interest rate differential is not staggering, as the interest rate on euro-denominated business reached 4.9% p.a. compared to 5.7% p.a. for koruna-denominated business.

At the same time, the share of non-performing corporate loans, i.e. those whose repayment is in difficulty for more than 90 days, fell slightly from 2.60% in November to 2.53%, which is a stable and very good figure. In absolute terms, the volume of non-performing corporate loans is CZK 36.1 billion against the total volume of loans to non-financial corporations at the end of December of CZK 1.429 trillion.