The aggregate assets of Czech commercial banks grew by 7.2% on the year to CZK 5.29tn (EUR 193bn) as of end-April 2014, speeding up from a 6.2% rise in the previous month, central bank data showed. The assets accounted for 146% of the full-year GDP forecast, according to IntelliNews calculations.

The annual lending growth, which had been easing for four months in a row, strengthened to 5.4% in April from 4.5% in March reflecting a stronger demand for corporate loans. The value of loans reached CZK 2.53tn as of end-April, up 0.4% on the month. Loans to residents made up 88% of the total and increased by 3.6% y/y in April, speeding up from 2.7% y/y in March.

The annual expansion of lending to households stayed at nearly a two-year high of 4.6% for the second straight month in April with the value of loans totalling CZK 1.19tn, up 0.2% on the month. Loans to companies grew by 1.8% y/y in April to CZK 860.6bn, following a 0.6% rise the month before. Loans to the general government fell 4.6% on the year to CZK 60.2bn, softening from a 7.3% decline in the previous month.

IntelliNews comment: We expect Czech loan growth to slightly accelerate in 2014 supported by the recovering economy which should return to a growth after two years of decline. Improving consumer confidence and rising real wages should support a growth in retail lending and the more favourable economic outlook and the new government’s plans for increased public spending should boost investments and corporate borrowing. According to estimates of the Czech Banking Association (CBA), bank lending growth is forecast to strengthen to 4.7% in 2014 and further gain speed to 5.6% in 2015.