Czechs Boost Bank Deposits as Economy Endures Recession

Czech households and businesses increased deposits in banks at the end of September even as the economy suffered a yearlong recession.

Client deposits rose by 239 billion koruna ($12 billion), or 8.3 percent, to total 3.1 trillion koruna from the same period of the previous year, the Prague-based Czech Banking Association said in a statement today. Household deposits rose 3 percent to 1.8 trillion koruna, it said.

“Deposit growth is significantly exceeding the annual increase in loans, allowing domestic banks to maintain very favorable ratio of loans to deposits and therefore a comfortable systemic liquidity position,” the association said. The loan- to-deposit ratio was 76 percent, it said.

The economy shrank for a fourth consecutive quarter between July and September, matching the longest decline ever as the government’s budget-deficit cuts constrained household spending.

Weakening domestic demand is taming inflation, which pushed the central bank to cut interest rates to effectively zero and prompted talk of weakening the currency should the economy require more policy easing.

To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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