Businesses and sole traders have an increasing problem repaying their loans. At the end of October, the general moratorium on repayments ended, and so the volume of outstanding loans increased from then until January this year. This follows from the calculation of CRIF – Czech Credit Bureau.
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“While households repay their loans relatively well even after the end of the credit moratorium, the situation is much worse for companies and sole traders,” says Věra Kameníčková, CRIF analyst. Entrepreneurs and companies together did not pay debts in the amount of 50 billion crowns.
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At the end of January, the companies did not repay loans worth 47 billion crowns, which represents 4.2 percent of their total debt. The volume of outstanding corporate loans thus increased by seven billion crowns, ie by 17 percent.
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Meanwhile, the self-employed did not repay their loans for three billion crowns, ie 6.6 percent of the debt. By January, the value of duly outstanding loans had risen by CZK 813 million, ie by 38 percent.
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It is entrepreneurs who are at risk of a loss of income due to a pandemic. “Many of them have been more or less dependent on state compensation for a year, but they cannot cover all their expenses,” explains Kameníčková. He adds that the problems of self-employed people with repayment are a warning for the future, although the number of terminated businesses has not increased in the last year.
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According to CRIF, the volume of outstanding debt can be reflected both in a higher number of terminated trades and in an increase in over-indebted people who will have to apply for debt relief.
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“On the other hand, it is necessary to recall that the payment morale of self-employed persons was at a record high in 2018 and 2019. For example, between 2009 and 2015, self-employed persons did not repay between 11 and 14 percent of their financial liabilities, “adds Kameníčková.
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A number of companies, sole traders and households saved last year. They decided to limit loans primarily to the development or start-up of a business. Since January 2020, self-employed persons have invested 21 billion crowns more in Czech banks, ie 14 percent. In total, they had 166 billion saved in January.
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“In the past year, self-employed people behaved similarly to households and businesses in the Czech Republic. They reduced their expenses, significantly reduced investments and those who could, in an uncertain situation, tried to create the largest possible financial reserves, “describes Kameníčková.
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Since last January, on the other hand, the total volume of self-employed loans has fallen by 1.4 percent, or CZK 651 million. “Banks have probably also played a role, as they are much more prudent in lending to self-employed people in vulnerable fields and do not comply with some loan applications,” adds Kameníčková.
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Not only companies and entrepreneurs, but also households have repaid loans worse in recent months. However, they were an exception and during the pandemic they were the only ones to borrow more than before. The most common reason was the purchase of real estate on a mortgage, other loans declined.
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At the end of January, households had borrowed almost 1.8 trillion crowns from banks, a year-on-year increase of 6.8 percent. The volume of non-performing loans has increased by three billion crowns in the last 12 months. In total, they did not repay 1.7 percent of their debts, which is a tenth of a percentage point more than in January last year.
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