The COVID-19 pandemic had little discernible impact on the Czech consumer lending industry during 2020. With the majority of consumer lending outstanding balance accounted for by mortgage/housing loans, the moderate and temporary dip seen in demand for new homes and the secured loans that finance residential property transactions did have some negative influence on consumer lending overall over the course of the year.
The first three confirmed cases of COVID-19 in the Czech Republic were reported on 1 March 2020. On 12 March, the government declared a nationwide state of emergency, the first time in the country's modern history that such a measure has been taken for the entire country.
Mortgages/housing lending was the strongest performer in consumer lending during 2020. Although a fairly pronounced slump was noted in the Czech housing market is the COVID-19 pandemic took hold in the country during the second quarter of 2020, the market rebounded very quickly from the initial downturn.
Among the major reasons for the resilience of the Czech Republic’s consumer lending market in the face of the pressures crated by the COVID-19 pandemic during 2020 was the key role played by the Czech National Bank to support the country’s banks and other lenders. As soon as the initial COVID-19 outbreak was announced, the National Bank authorised an easing of the official lending criteria, which were set during 2018 and 2019.
By the end of 2020, the September 2019 implementation of the EU’s PSD2 directive had not introduced any major disruption or rush towards innovation into the Czech consumer lending market. However, the COVID-19 pandemic and the subsequent closure of many bank branches and finance company offices led to the widespread adoption of new payment technologies.
While the impact of the COVID-19 pandemic on the Czech Republic’s consumer lending market has so far been relatively muted, is expected to have presaged a mini-revolution in the way that people borrow money. Moreover, the financial pressures that many households a feeling due to the adverse economic situation has emerged in the wake of the COVID-19 pandemic are likely to continue impacting various consumer lending categories during the forecast period.
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This report originates from Passport, our Consumer Lending research and analysis database.
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