Banking statistics for October 2024
Commentary by Miroslav Zámečník, Chief Advisor of the Czech Banking Association
Households
New consumer credit disbursements reached CZK 12.6 billion in October, an all-time record for the past four years. Given rising wages in real terms and solid consumer sentiment readings in recent CSO surveys, the willingness to borrow for consumption appears to have returned. For the time being, the very low non-performing loan percentages for consumer loans to the population do not suggest that households that are clients of banks are having serious repayment difficulties. The share of non-performing loans in this category has fallen by three-tenths of a percentage point month-on-month from 4.26%, and we see a similar trend in credit cards, as well as overdrafts and current account overdrafts.
At 8.6%, the interest rate on consumer credit has been falling slowly; thus, both relative to inflation and average nominal wage growth, the real interest rate is quite high.
The population is still paying mortgages in an exemplary manner; even in an international comparison, the share of non-performing mortgages, at 0.6%, is still among the lowest in the EU. According to CNB banking statistics, mortgages recorded an increase in the volume of new business from CZK 19.3 billion to CZK 20.9 billion, with the interest rate falling slightly to 4.98% from 5.05% in September.
Businesses
If we look at the evolution of corporate loan balances, we see a year-on-year increase of less than five per cent, with the volume of new CZK-denominated business falling to CZK 21.1 billion month-on-month from September's CZK 24.8 billion. We see an even larger month-on-month "downturn" in foreign currency loans, where the volume of new business fell to CZK 16.4 billion from September's 26.5 billion, despite the fact that the interest rate differential rose to 1.29 percentage points, mainly due to the significantly lower interest rate on euro deals at 4.56% p.a. compared to CZK 5.85% p.a.
The share of non-performing corporate loans, i.e. those whose repayment has been in difficulty for more than 90 days, rose slightly to 2.56% from 2.42% in September, but this is still an extremely good figure. In absolute terms, this represents an increase of around CZK 2 billion.
Development of the main segments of the credit market (year-on-year, %)
Source: CNB, CBA Monitor
The annual growth rate of household deposits has bottomed out in recent years in the 2022 half-year, rising almost every month since then and now hovering around eight per cent since January this year, up from 7.6 per cent in October.
Crown deposits of the public have been rising steadily, albeit at varying rates, although imputed interest no longer accounts for as much of the increase as interest rates have fallen significantly over the past year. In October, the volume of deposits held by the public rose from CZK 3,599 billion to CZK 3,612 billion month-on-month, setting a new record in nominal terms. Of these, CZK 1,244 billion, or 34.4%, were in non-term, low-interest deposits.
The year-on-year dynamics of deposits of non-financial corporations is characterised by much higher volatility, characterised by ups and downs of the curve, often very sharp. Over the past year, corporate deposits have risen by CZK 109 billion to CZK 1 574 billion. They continue to exceed the volume of loans to businesses by a wide margin, with 63.3% of low-interest non-term deposits, which are just below the CZK 1 trillion mark.
Development of deposits in the main segments (year-on-year, %)
Source: CNB, CBA Monitor
Non-performing loans in main segments (%)
Source.