Banking statistics for June 2025
Commentary by Miroslav Zámečník, Chief Advisor of the Czech Banking Association
Deposits of the population fell slightly - from a record level - to CZK 3 732 billion. The excess of corporate deposits over loans is still high - 118 billion in June. The repayment behaviour of people, trades and businesses remains very good, and excellent in the case of mortgages.
Households
Consumer credit
Total consumer credit (including overdrafts and credit cards) reached CZK 372 billion in June, up one percentage point month-on-month and a brisk 10.5% year-on-year. The recovery in consumption is thus being financed, in addition to the growth in real incomes, by consumer credit, where the dynamics have exceeded the consumer price index by a considerable margin for more than two years. The share of loans with repayment difficulties ('non-performing') has remained virtually unchanged for several quarters, at around 4.2%.
Mortgages
Last year's jump in mortgage originations has continued this year, albeit at a more moderate pace. According to the CBA's own Hypomonitor data, updated monthly, new mortgages amounted to CZK 29.4 billion in June, while the volume of refinancing or increases amounted to CZK 8.1 billion. The decline in interest rates on new mortgages has virtually stopped, from 4.60% in May to 4.56% in June. If the current demand for mortgage loans continues, the total volume of new mortgages could reach CZK 294 billion this year, up from CZK 228 billion last year, an increase of 22.5%.
The double-digit growth in property prices, which has spread from Prague to the regions, is due not only to the insufficient supply of new construction and the growth in real incomes, but also to the continuing demand for investment apartments, which are often paid for in cash. This is a very interesting phenomenon, because as prices rise even faster than rents, the returns on these investments fall significantly - again, evidence of the conservative profile of many investors for whom "a brick is a brick". Unfortunately, the appetite for this type of asset also complicates the situation for those who are looking for property for their real housing needs and are dependent on mortgages. While rates have fallen from recent peaks, given these factors, this is not a significant relief for those looking to own their own home, as the rise in house prices is reflected in mortgage repayments through the increase in the size of mortgage required, eliminating the modest savings from lower rates.
Guaranteeing real estate and all of their assets encourages borrowers to be extremely disciplined when it comes to mortgage repayments, which is fully confirmed in the Czech Republic: the proportion of non-performing mortgages was at a low of 0.59% in June, but has been at similar levels for three years. As a result, we are consistently among the countries with the best payment morality in Europe.
For loans granted by banks to sole traders, the share of non-performing ones at 4.11% in June remained within sight of the best historical figure (4.09%) in the last twenty-three years. Incidentally, this is roughly one-third the share of a decade ago.
Non-financial sector companies
If we look at the evolution of corporate loan balances, we see an increase of 26 billion in koruna-denominated ones compared to May, while euro-denominated balances fell by 12.7 billion. Meanwhile, the June production of new loans was 46 billion in koruna and 26 billion in euro equivalent (the difference between the stocks and the monthly production is due to the repayment of old loans). Interest rates on new koruna business were 4.7% in June, while euro loans were at 3.3%.
The share of non-performing corporate loans, i.e. those that businesses have difficulty repaying for more than 90 days, is at 2.57%, another excellent figure in international comparison. Together with the high level of corporate deposits, this suggests that at an aggregate level, "corporates" remain healthy but financially very conservative.
Development of the main segments of the credit market (year-on-year, %)
Source: CNB, CBA Monitor
Deposits
The year-on-year growth rate of personal deposits has bottomed out in the first half of 2022, rising almost every month since then, and since about May last year we have seen a slowdown to 4.7% in June. Nominal deposits are at a record high, even with month-on-month stagnation, and it is worth noting that according to the National Accounts statistics, Czech households continue to maintain a savings rate half that of the long-running pre-Cold War average.
If we were now to see both a decline in the savings rate as real incomes rise and savings no longer being directed into deposit accounts, this would be essentially two positive messages from a national economic perspective. First, that the level of uncertainty and fear about future developments is falling and savings rates are therefore returning to normal. Second, that money is shifting and testing new yield/risk boundaries.
The report of the Ministry of Finance on the development of the financial market already registers a strong increase in funds in investment funds over the past year, which is many times higher than the growth of deposits in credit institutions (+30.8% vs. 7.7%) On the other hand, at the end of June the population still had one trillion and 269 billion crowns in current accounts, despite a slight interest rate.
The volatility of deposits of non-financial corporations is considerably higher than that of households, as can be seen in the chart, in fact, in the month-on-month average, a significant drop of 24 billion (-1.5%) can be registered for June, but it is still the case that the total volume of deposits exceeds the volume of loans by 118 billion. From an economic point of view, this phenomenon is an anomaly, unprecedented before the Covide. In a predatory business environment, firms invest in the expansion of their activities and credit typically far outweighs deposits (some funds are tied up in receivables or inventories), while cash hoarding is a concomitant sign of uncertainty, limiting investment and waiting for the weather to clear. The impact of this on economic growth is clear.
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