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Ceska Sporitelna Expects Fourth-Quarter Rebound in Loan Demand, Chief Says

Ceska Sporitelna AS, the Czech unit of Erste Group Bank AG, said demand for loans by companies may rebound at the end of the third quarter following a seasonal slowdown during the summer.

“We expect a market rebound in the second half of the year,” Chief Executive Officer Gernot Mittendorfer said on the sidelines of a press conference on July 30. “I’d guess after the summer break we’ll see a revival in corporate loans but it will be mainly visible in the fourth quarter.”

Ceska Sporitelna’s total loan portfolio fell 1.1 percent from 463.5 billion koruna ($24.5 billion) as of June 30 from a year ago, the lender said in a presentation on its website. Corporate loans fell 5 percent, while retail loans rose 2 percent, it said.

“We see continuous growth on a relatively moderate level from micro-, small- and medium-sized companies, but no big corporates need financing at the moment,” Mittendorfer said, adding that retail loan-portfolio volumes remain stable.

Ceska Sporitelna’s first-half profit fell 6.8 percent to 5.8 billion koruna from 6.3 billion koruna a year ago as provisions for bad loans rose, the Prague-based lender said today. Risk provisions for loans and advances rose 39.2 percent to 5.33 billion koruna in the first half from a year ago.

‘Very Prudent’

Sporitelna has taken a “very prudent” approach to assessing non-performing loans in its portfolio, he said. The portfolio “includes not only clients that are 90 percent overdue for 90 days but also clients that are not overdue a single crown,” Mittendorfer said. “This is based on our expert assessment of client’s ability to fully repay the loan.”

Lenders assess the financial situations of clients and create provisions for parts of loans in case there are indications customers may run into problems with repayments. Such provisions may rise or disappear over the time from the portfolio depending on the developments of clients’ financial situation.

Sporitelna risk costs peaked in the first quarter and the growth of non-performing loans volume has slowed, Mittendorfer said.

To contact the reporter on this story: Lenka Ponikelska in Prague lponikelska1@bloomberg.net.

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