In a recent economic report, the Czech National Bank (ČNB) revealed a significant increase in household debt, painting a picture of growing financial strain on Czech families. As of August this year, household debt to banks has climbed by 10.6 billion crowns, reaching a staggering 2.33 trillion crowns.
While households grapple with mounting debts, the corporate sector shows a different trend. Corporate debt saw a decrease of 5.1 billion crowns compared to July, totalling 1.41 trillion crowns in August. This contrasting pattern highlights the divergent financial pressures faced by individuals and businesses in the Czech economy.
Financial analyst Petr Javůrek from Provident Financial points out that the overall household debt in August grew faster than last year. “We expect this trend, which has been consistent in previous months, to continue until the end of the year. Mortgages and housing loans drive the acceleration in debt accumulation, as their interest rates are slightly decreasing,” Javůrek explained.
The ČNB’s data reveals that household debt has been on a steady rise since February 2016, with a brief exception in April 2022 due to the revocation of the banking license of the Czech branch of Russia’s Sberbank. Housing loans constitute the lion’s share of household debt, accounting for over three-quarters of the total. In August alone, the volume of housing loans increased by 0.4 percent, reaching 1.794 trillion crowns.
On the corporate front, debt levels have been fluctuating. This year, corporate debt increased until April, decreased in May, rose again in June and July, only to decline in August. Long-term loans make up the most significant portion of corporate debt, amounting to 772 billion crowns in August, which is 55 per cent of the total volume of loans to non-financial corporations.
As the Czech economy navigates these complex financial waters, the ČNB monitors the situation closely, releasing monthly statistics. The August banking statistics in the Czech Republic were compiled from source data of 45 actively operating banks and branches of foreign banks, excluding the ČNB itself.