Bank deposits for Czech firms and households show record growth in 2020

CRIF has determined that Czech firms' deposits at banks grew by 11 percent last year, representing the largest annual growth since 2007, while for households, bank deposits rose by 12 percent, the largest since the birth of the independent Czech Republic in 1993.

The total amount of companies' deposits at banks increased by Kc123bn to Kc1,218bn at the end of 2020, while the amount of outstanding bank loans rose by mere Kc3bn (0.3 percent) to Kc1,123bn.

"While the volume of business loans grew at the slowest rate since 2010, the volume of business deposits rose at the fastest pace since 2007, and in absolute terms it even grew the most since 1993," CRIF analyst Vera Kamenickova said.

2020 was the first recorded year in which business deposits at banks markedly exceeded loans. At the end of 2019, business deposits were Kc25bn lower than loans, at the end of 2020 they were Kc95bn higher.

"The economic activity of the private sector was effectively frozen in many respects last year. Since firms lacked the economic certainty to make important decisions, they often postponed them," Kamenickova added.

In details:

• Household bank deposits at banks increased by Kc331bn, exceeding the Kc3,000bn threshold of for the first time ever in November 2020.
• Household bank loans, rose by 6.5 percent, or Kc114bn, to Kc1,900bn at the end of 2020.
• Housing loans accounted for 75% of the total loan figure, the highest share in Czechia's history. Since 2005 it has increased by nearly 10 percentage points.
• Czech households had housing loans worth Kc1,400bn as of the end of 2020. Consumption loans amounted to Kc264bn and other loans totalled Kc162bn.
• While at the end of 2019 households' bank deposits exceeded loans by Kc980bn, at the end of 2020 the gap reached nearly Kc1,200bn.

“The substantial increase in the difference between deposits and loans is particularly noteworthy in light of the fact that many individuals have experienced significant drops in household income. As a result, consumption has decreased in order to manage income flows for any future crises”, Kamenickova said.

The average deposit per capita reached Kc285,000 at the end of 2020, which corresponds to 8x the national gross average wage. In comparison, in 2019, the figure equalled 7.5 times the average wage, while in 2014 it was 7x and 6x in 2008seven average wages and the figure for 2008 corresponded to six average wages.