Consumer Credit in the Czech Republic

PROSPECTS

Confident consumers continue to drive credit expansion in 2018

Consumer credit posted solid growth in total outstanding loan balance and gross lending during 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 Czech Republic experienced healthy growth in outstanding balance and gross lending during 2018, albeit with the latter being marginally slower than in 2017. According to the Czech Banking Association, consumers mostly borrowed for home appliances, furniture, home improvement and reconstruction during 2018.

Card lending and overdrafts in a continuous decline during 2018

Outstanding balance for card lending and bank account overdrafts experienced a downturn for the last three years of the review period. One of the major reasons for declining balances are more educated consumers, better utilisation of credit card interest-free periods as well as good debt repayment discipline.

COMPETITIVE LANDSCAPE

Competition revolves around digitalisation of banking services in 2018

The improvement of mobile banking applications and online consumer credit were one of the main differentiating factors for banks in 2018. Virtually all banks have invested billions of Czech koruna to innovate their mobile banking experience for clients.

Market concentrated but more transparent because of licensing

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.

Consumer credit controlled by banking institutions

Consumer credit in the Czech Republic is controlled by banking institutions. The leading providers of consumer credit among banks in the Czech Republic are Ceska Sporitelna, Komercni banka and Ceskoslovenska Obchodni Banka.

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