Banking statistics for February 2025
Commentary by Miroslav Zámečník, Chief Advisor of the Czech Banking Association
Deposits of companies, residents and local governments have grown much faster than cumulative inflation in the five years since the pandemic broke out. Businesses and residents continue to repay loans like clockwork.
Households
Consumer credit
The total volume of consumer credit (excluding overdrafts and credit cards) reached CZK 335 billion in February, a slight month-on-month increase of less than seven-tenths of a percent, but on a year-on-year average basis the rise is almost CZK 29.1 billion, a 9.5% increase. The rebound in consumption is thus partly financed by consumer credit, where year-on-year growth rates have been rising since last April, with persistently low percentages of those having difficulty repaying them. The share of non-performing loans in this category rose to 4.27% month-on-month, up five-hundredths of a percentage point. This is evidence of solid repayment performance, at least as regards consumer loans granted by banks.
Mortgages
Last year was marked above all by a significant recovery in interest in mortgage lending, and all indications are that interest in mortgages will continue this year. Year-on-year lending in this category rose by 5.21% to CZK 1.734 trillion.
Homebuyers are apparently weighing up information on the faster rise in house prices in a number of regions against the expected fall in interest rates. Those who do achieve a mortgage often conclude that there is no reason to delay their decision.
As regards interest rates, which have fallen relatively slowly so far, an increase in competition between providers is desirable from the point of view of clients this year. They will also be competing with each other for the massive volumes of mortgages that are coming to the end of their fixation from a period of exceptionally low rates, and clients will be comparing refixation terms carefully given the prospect of rising repayments: if there is a big difference, they may vote with their feet.
According to the CBA's Hypomonitor, based on the CBA's own data collection from member banks (and therefore slightly different figures compared to the CBA's banking statistics), the volume of new business without refinancing rose month-on-month from 18.70bn to 21.13bn in February 2025, with interest rates falling from 4.78% to 4.72% in February, and 5.30% a year ago.
Compared to most EU countries, the Czech Republic has an exceptional payment discipline, which is particularly true for mortgage repayments; over the past year, the share of non-performing mortgages has been stable at 0.63%, making it one of the lowest in the EU.
Non-financial corporations
If we look at the evolution of corporate loan balances, we see a very interesting evolution by type of enterprise. While the volume of loans to public enterprises recorded a high year-on-year increase of almost 35%, the increase in loans to private companies owned by domestic capital was 4.35% year-on-year, while the volume of loans to those under foreign control fell slightly.
The volume of new koruna business (excluding overdrafts) stagnated at CZK 21 billion month-on-month, with koruna rates falling to 5.5% p.a. After a dramatic fall in new euro business from December's CZK 51 billion to CZK 19.7 billion in January 2025, the volume picked up to CZK 23 billion in February, with rates falling to 4.2% from January's 4.9%.
At the same time, the share of non-performing corporate loans, i.e. those that companies have trouble repaying for more than 90 days, rose slightly, by two hundredths of a percentage point, to 2.58%, a very good figure even in international comparison. Together with the high level of deposits, this suggests that at an aggregate level, 'corporates' are financially sound.
Development of the main segments of the credit market (year-on-year, %)
Source: CNB, CBA Monitor
The year-on-year growth rate of the population's deposits has bottomed out in the first half of 2022 in recent years, has risen almost every month since then, and since about May last year we have seen a very slight decline to 6.3% in February 2024, which means, however, that in absolute terms the volume of deposits has grown by CZK 222 billion year-on-year to CZK 3.7 trillion. This is a new absolute record, even though more than a third of money is still held in highly liquid but only nominally interest-bearing current accounts.
The year-on-year dynamics of deposits of non-financial corporations show much higher volatility, characterised by ups and downs of the curve, often very sharp. This is illustrated by the example of February this year, with a month-on-month decline of CZK 12 billion in deposits of foreign-controlled enterprises, while the volume of deposits of private domestic enterprises stagnated and that of public enterprises rose by almost CZK 19 billion. Thus, overall corporate deposits rose marginally to CZK 1,570 billion in February. In the case of foreign-controlled enterprises, the relatively lower volume of deposits than would correspond to their weight in the gross value added or capital of the entire corporate sector has a relatively easy explanation in the form of cash-pooling, where the management of financial affairs is mostly centralised at the level of the parent company.
However, corporate deposits continue to highly exceed loans to non-financial corporates, by almost CZK 132 billion in February, a phenomenon we have been observing since the 2020 covenant summer, before which it was quite unusual.
Incidentally, compared with February 2020, when the pandemic had only just begun to spread through Europe, the volume of corporate deposits increased by 43%, of which those privately held by domestic entities increased by 52%, those held by local government and social funds by 68%, and those held by the general public by 45%. In all these cases, the increase in deposits thus exceeded cumulated inflation. Banking statistics on deposit account balances tell a very different story from opinion polls.
Development of deposits in the main segments (year-on-year, %)
Source: CNB, CBA Monitor
Non-performing loans in main segments (%)
Source: CNB, CBA Monitor
Share of non-performing loans in EU/EEA countries (%)
Source: EBA