Czech banking assets up 8.9% y/y in Aug 2014, loan growth weakens to 5.2%

By bne IntelliNews October 1, 2014

The aggregate assets of Czech commercial banks grew by 8.9% on the year to CZK 5.32tn (EUR 196bn) as of end-August 2014, slightly strengthening from an 8.6% rise in the previous month, central bank data showed. The assets accounted for 131% of the full-year GDP forecast, according to IntelliNews calculations.

The annual lending growth eased for the second straight month reaching 5.2% due to weaker demand for corporate credits. The value of loans reached CZK 2.56tn as of end-August, up 0.4% on the month. Loans to residents made up 88% of the total and increased by 3.7% y/y in August, slower than July’s hike of 3.9% y/y.

The annual growth of lending to households stayed to 4.6% for the third month in a row with the value of loans totalling CZK 1.21tn in August, up 0.3% on the month. Lending to businesses, on the other hand, grew at the weakest pace in five months rising by just 1% y/y to CZK 852.4bn. Loans to the general government went up 6.3% y/y to CZK 65.1bn in August, following a 1.1% y/y increase in the previous month.

IntelliNews comment: We expect Czech loan growth to strengthen in 2014 supported by the recovering economy. Improving consumer confidence and rising real wages should boost retail lending, while the more favourable economic outlook and the new government's increased public spending are to support investments and corporate borrowing. The latest stress tests by the central bank showed that Czech banks are sufficiently stable to withstand another recession while remaining profitable partly thanks to the current weak-koruna regime. The banking sectors stability continues to be based on its high capital adequacy ratio, which stood at over 17% at the end of-2013, well above the regulatory minimum of 8%.

Related Articles

Multilateral lender IIB to place its inaugural transaction in Czech koruna

Moscow-based development bank International Investment Bank (IIB) has priced its denominated private placement transaction with three-year floating rate notes in koruna of CZK501mn, the bank said in ... more

ArcelorMittal proposes to divest assets in Czech Republic, Macedonia and Romania

International steel and mining company ArcelorMittal said on April 13 it has proposed a divestment package to the European Commission in a bid to obtain approval for its planned acquisition of ... more

Finland gives final nod to construction of Nord Stream II

Finland has issued a second and final permit for the construction of the controversial Nord Stream II pipeline that is to pump gas from Russia directly to Germany via a Baltic Sea route, the Regional ... more