Czech banks, including saving banks, had the most successful year in the history of the Czech Republic, increasing their total net profit by CZK2bn annually to CZK75.9bn (€2.98bn), according to data published by the Czech National Bank (CNB) on March 30. 

“Banks and saving banks are experiencing a record economic boom. They reached in 2017 the highest profits in history. A positive factor was especially turnover of the interest rates upward, which helped to increase the net interest margin of part of the banks. The economy is booming, so the sheer volume of loans also increased,” said analyst of BH Securities Martin Vlcek.

The balance sheet size of the sector exceeded CZK7 trillion, which means an increase of more than CZK1 trillion annually. Profit from interest increased by CZK3.3bn to CZK148.8bn. Profit from fees and commissions decreased by CZK300mn to CZK44.5bn.

The interest income for the whole sector was positively growing, said Vlcek, adding that such income represents the dominant part of the banks’ profit. Meanwhile, the decrease in fees and commissions was caused by the entry of new, low-cost banks such as Equa or AirBank, which are pushing the fixed fees down for older banks.

 

 

 

 

 

 

 

“The risks for the sector are increasing wage costs, competition from new fintech companies and low-cost banks,” Vlcek added.

Ceska sporitelna experienced a drop by 5.5% annually in net profits to CZK14.6bn. This decrease was caused, as Ceska sporitelna stated, by the one-off sale of Visa Europe, which ensured an extraordinary economic year for the bank in 2016.

Komercni banka increased its net profit by 8.5% to CZK15.3bn.

CSOB group had also a successful year, increasing its net profit by 16% to CZK17.5bn due to the good situation on the financial markets, the growth of the volume of interests and higher revenues for fees on investment products.

Czech and Slovak UniCredit Bank made a net profit in 2017 of CZK7.2bn, which is a y/y increase of 27.3%.

The Czech financial market also saw an increase in the total number of banks. In 2017, 47 banks, foreign branch banks and building societies operated in Czechia. This is the highest number since 1997 when the Czech market was made up of 50 institutions.

 

 

 

 

 

 

 

 

 

 

 

 

The CNB also issued banking statistics for February 2018. “The total assets of the Czech banking sector stood at CZK7.330bn at the end of February 2018. Loans to residents are the predominant asset item. Their volume reached CZK5.427bn. Deposits of residents, which are the most important item among banking sector liabilities, totalled CZK 4.269bn, the commentary reads.

Loans to households amounted to CZK1.542bn. “As regards the breakdown of loans to this sector by purpose, loans for house purchase were the largest item (CZK1,160bn in February 2018, up by 0.5% month on month). They accounted for 75% of the total volume of loans to households,” it continues.