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Volume of mortgage loans for businesses up

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Prague, Aug 5 (CTK) – The volume of newly provided mortgage loans for businesses grew by almost 2 percent to Kc29.7bn in the first half of this year, according to Local Development Ministry statistics.

Mortgage loans for businesses thus made up 43 percent of the total number this year due to a decrease in mortgage loans for individuals, while a year earlier their share stood at only one third.

Mortgages for businesses thus partly make up for the strong fall in demand for these loans from the side of individuals, caused mainly by the economic recession.

AWD CR analyst Stanislav Beran said businesses were an interesting client group for banks.

“It is rarely only one-time financing, as we are used to by mortgage loans for individuals. Entrepreneurs develop and so do their demands for financing the development of their companies. This is their potential in the eyes of banks,” he noted.

Lubos Svacina of server also said that banks had started to focus more on the business segment.

“Banks started to actively offer mortgage products for entrepreneurs and learned to provide them to a wider extent in their branches. Until recently, it was mainly a matter of larger branches or specialised mortgage centres,” he added.

Loans for individuals are still the main mortgage product for banks, however, and banks believe they have an important potential.

Market number one Hypotecni banka does not even provide mortgages to businesses at all. Ceska sporitelna has not registered any growth in mortgage loans for businesses in the first half of this year and does not expect it in the second half, either.

UniCredit Bank spokesman Tomas Pavlik does not believe mortgage loans for businesses will prevail in the future. Moreover, a change in legislation caused that some investment loans started to be included in the mortgage loans category, which could have influenced the statistics.

Conditions of mortgage loans for businesses are different from mortgage loans for individuals. By businesses, the entrepreneur is examined, his history, possibilities, experience, potential, and of course the investment plan,” Beran said.

The loans’ maturity is mostly shorter, of less than ten years, and interest on mortgage loans for businesses is higher, he added.

Volume of mortgage loans (Kc bn):

H1 2008 H1 2009 Growth/fall (pct)
Businesses 29.112 29.668 +1.9
Individuals 59.547 39.699 -33.3
Municipalities 0.079 0.202 +156


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