The risky debt ratio, monitored for a long time by the Czech Banking Association (ČBA) through a survey by the Ipsos agency, is 10% this year. In reality, this means that one in ten Czechs who have experience with loans (according to the survey, 75 percent of people) could get into trouble if they score 4 or more points on the scale. Compared to last year, however, the situation has improved slightly, precisely by one percentage point.
| CBA risky loan index | |
|---|---|
| Risky behavior is defined on a scale from 0 to 9, where risk increases as the number of points increases. | |
| 4 or more points = risky consumer | |
| Evaluation criteria | |
| The consumer is willing to cover the repayments with another loan | 2 body |
| The consumer wants to resolve the impossibility of paying with another loan | 2 body |
| The consumer is currently repaying 3 or more loans | 2 body |
| The consumer borrowed in case of lack of funds in the long run | 1 body |
| The consumer has borrowed for normal consumption or entertainment | 1 body |
| The consumer borrowed from a non-bank corporation or individual without finding out if they have a license to lend from the CNB | 1 body |
| TOTAL | 9 points |
And what do the Czechs borrow for most often? Three in ten cited a car or motorbike as a loan item, more than a quarter (27%) borrowed for apartment renovations, roughly the same number (26%) for consumer electronics and another quarter (26%) for white goods. A fifth of people (21%) have furnished an apartment with borrowed money.
For a loan, especially to the bank
The vast majority (53%) of Czechs have visited the bank for a loan or credit. More than a quarter (28%) of borrowers took out a loan from installment companies. Less than a quarter of people have borrowed money from family or friends (23%).
“Czechs who have taken out a loan in the past have often turned to a bank to do so. This is good news because the level of risk in this case is very low. But what is striking is that people are often not interested in non-banking companies, for example, if they also have a license from the central bank. In that case, the level of risk is very high and unforeseen situations can arise,” emphasized CBA lawyer Filip Hanzlík.
The survey showed that for installment companies only a quarter of respondents verified their license with CNB, and for loans directly from merchandise sellers, less than a fifth.
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The most used credit product is the current account overdraft or authorized overdraft. Nearly a third of the population (31%) have experienced it. Almost three out of ten people have ever bought in installments and 28% of Czechs have experience with another consumer credit or loan. A quarter of the population has already paid by credit card.
22 percent of respondents already have or are repaying a mortgage loan, less than a fifth of respondents (18 percent) have experience with a mortgage from a construction company and just as many are indebted to relatives or acquaintances.
Survey
Do you have experience with any of the loan products?
Yes, I have borrowed in the past, but now I owe no one.
Yes, I am currently paying off the loan.
No, I’ve never borrowed.
A total of 150 readers voted.
Payout morale is improving
About one in two Czechs (48%) who have borrowed in the past are currently in default on anything. Those with outstanding mortgages are more often paying off a car or motorcycle (13 percent), or renovating an apartment (12 percent).
At the same time, people’s repayment capacity is still at a good level. It’s been a few months since the CNB’s regularly released banking statistics, analysts are watching anxiously to see if the share of households that are having trouble repaying their obligations to banks isn’t starting to rise. In the case of loans to households, their total volume increased by SEK 7 billion to SEK 2 trillion 131 billion at the end of October, while the share of non-performing loans stagnated at SEK 27 billion in nominal terms and fell to 1. 2 percent in relative terms. For mortgages, this share is 0.58 percent, the same as in September, but it was an all-time low.
“Given the fact that the economy appears to have entered a recession and the media image is poor, this is excellent news. While aggregate statistics do not provide a plastic view of the financial position of individual households, it is nevertheless true that households have more money in the bank than they need, and they continue to repay very well,” Hanzlík added.
Czechs very often borrow a lot or a little
Similarly, in 17% of cases, people borrow more than half a million crowns or, conversely, less than 20,000 crowns.
Most often because they don’t have enough money, as indicated by three-fifths of respondents. Less than a fifth does not want to wait and save for selected goods, one in eight takes advantage of advantageous offers for installment payments and one in seven declares that they do not have the opportunity to save.
The survey also showed that 9% of Czechs would take out a loan to pay off another loan, most often from a bank (45%) or from relatives and friends (36%).
“At the same time, taking a loan to pay off another loan is very risky behavior,” said Ipsos’ Michal Straka.
In the event of repayment problems, 29% of borrowers would seek to negotiate a deferral of repayments with the loan provider. Less than a quarter would be borrowed from relatives or friends. Around one in six would then seek to consolidate loans at the bank and one in eleven said they would not address the situation at all.
Over the next 12 months, he intends to borrow five percent of the Czechs.
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