This article concludes Hospodářské noviny’s interview with Gernot Mittendorfer, head of retail-banking leader Česká spořitelna. You can read the first half of the interview here.
What do you think of stimulation programmes and financial incentives to businesses?
When companies see their orders freeze virtually overnight, something has to be done and it is necessary to boost demand. Only after the crisis is over can we analyse which packages were more reasonable and more efficient. The question is whether the packages’ immediate stabilisation will restor confidence and stabilise economic growth. This is something we will know after a few months.
What would you regard as a reasonable move to further stimulate the economy?
I like very much the green subsidies for home insulation and environmentally-friendly heating which the Czech Republic has introduced because it has a local effect. Initiatives like the car-scrapping subsidy have had only a partial effect in the countries that adopted them. We can see this in Germany, for example.
Should the Czech Republic introduce a car-scrapping scheme?
From the viewpoint of the Czech Republic, I would encourage all of the neighbouring countries to create the largest car-scrapping incentives possible, but I would not introduce it here.
Many companies regard the current crisis as a chance to restructure and acquire stakes in other companies, simply to expand their business. Is Česká spořitelna also going to use the crisis this way?
We are not in a phase when we would want to buy something. We basically cover all the activities that we need for our clients. We do not want to abandon our standing business model.
The crisis has reduced demand for loans by households as well as of businesses. Aren’t you going to boost the demand by cutting interest rates on loans?
Our interest rates are stable and there is no reason to reduce them now. Clients themselves borrow less and we are not pushing them into taking loans either. We are ready to lend money, but a recovery in demand for loans could come probably in the middle of next year at the earliest.
How will interest rates on loans develop in the next six months?
I do not expect any big changes to come. Rather I think rates will stay at their current level.
You are familiar with the environment in Austria. Have you observed any differences in the way Czechs and Austrians behave during the current crisis?
When it comes to disposable income, the levels in the Czech Republic and Austria are similar. The way Czechs behave is similar to the way Austrians do – they are saving more. However, there is a big difference in that Austrians lost a lot of money last year because they had deposited a lot more in various investment products.
Unemployment in the Czech Republic will reach some 10% towards the end of the year, according to some estimates. Is Česká spořitelna going to help clients who are unable to settle their loans?
We are ready to do so. We can find solutions with our customers and help them through difficult periods, but they have to come to us as soon as possible and not let a small problem turn into a big one. We have not experienced any fundamental problems with defaulters, however. We know that we cannot count on a major improvement in employment in the next 12 months, and we know that unemployment has not peaked yet, but we also know that things will not be as bad as some people had thought.
Last month, Česká spořitelna introduced a programme of subsidised loans for business investment, Top Podnik II. You earmarked CZK 1 billion for the programme. Why?
Given the current debates on the accessibility of loans, we wanted to provide firms with a signal that we can secure financing for them. The first clients have already shown their interest. We said that we had CZK 1 billion for those loans, but we will raise that amount if more money is needed.
Česká spořitelna made more than CZK 6 billion in profit in the first half of the year, just a bit lower than a year ago. Do you also project your full-year profit roughly at last year’s level?
Last year’s profit set a record high. One reason why was that it included revenue from the sale of our insurance company. We have no such plans for this year, so the total revenue will not include any such extraordinary items. I cannot answer your question because our parent group, Erste Bank, does not publish net profit forecasts at present, and neither do we. But our performance has been very good so far, and we believe it will continue in the next two quarters.
Česká spořitelna’s first-half net earnings were CZK 6.3 billion, a year-on-year decline of 4.4%. The bank’s first-half operating profit was CZK 13.4 billion, a year-on-year increase of 21.4%, confirming the bank’s strong position on the market. Return on equity was 19.9% in the first half. Despite a year-on-year decline of three percentage points, it is still a very efficient investment.
Gernot Mittendorfer (45)
Mittendorfer studied law in Linz. He has worked for Erste Bank for 19 years, at the helm of Česká spořitelna since June 2007. He was previously the head of Austria’s Salzburger Sparkasse.
