Consumer Credit in the Czech Republic

PROSPECTS

Consumer credit increases, as competition leads to lower interest rates

Consumer credit posted solid growth in the outstanding balance and gross lending during 2019, although slightly slower than in 2018. Rapid wage growth and record levels of consumer confidence encouraged increased borrowing for consumption purposes.

Czech consumers mostly borrow for their homes, cars and electronics

Non-card lending in the Czech Republic experienced healthy growth in the outstanding balance and gross lending during 2019. According to the Czech Banking Association, consumers mostly borrow for home appliances, electronics, furniture, home improvement and reconstruction.

Card lending and overdrafts in continuous decline

The outstanding balance for card lending and bank account overdrafts experienced a downturn for most of the review period. Amongst the major reasons for declining balances were more educated consumers, better utilisation of credit card interest-free periods, as well as good debt repayment discipline.

COMPETITIVE LANDSCAPE

Major banks expand their portfolios and players offer digital solutions

Virtually all the major banks in the market grew their consumer credit portfolios in 2018, with this strengthening concentration in the category. The largest bank in the market in terms of customers is Ceska Sporitelna, and its consumer credit portfolio grew by 6% in 2018.

Joint-venture to expand Mall Pay

Mall Pay, launched in November 2018, is a mixture of consumer credit and online payment method, which gives customers the ability to order goods online in Mall Group e-shops and delay payment for 14 days, interest-free. The second largest Czech bank, Ceskoslovenska Obchodni Banka, entered into a joint-venture with the second largest Czech e-commerce player, Mall Group, in order to expand Mall Pay.

Non-bank players offer consumer credit, mainly auto loans

After the Czech National Bank granted licenses to a limited number of non-bank credit providers, the market experienced strong concentration. This also resulted in greater transparency and security, as consumers can now be certain that their creditors are trustworthy.

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