Doing Business In - International Franchise Association

successful in the Czech market and is predicted to continue its rapid growth.
Low-cost internet banks focus primarily on cheap deposit products. New internet
banks are expected to enter the growing market in 2010.
• Private banking has been booming in the Czech Republic for the last decade. As
the number of Czech and other Central and Eastern European wealthy
individuals is set to grow, banks expect a more stable, yet constantly growing
business in this region. Growth potential exists not only for asset management,
but also for wealth transmission. Newcomers are expected on the market to tap
this new potential.
• The Czech mortgage market decreased by 37.5% in 2009. Mortgage banks
provided US$3bn worth of mortgages to individuals, companies and
municipalities in the first three quarters of 2009, down from US$6.2 in 2008 and a
record high of US$7.7 in 2007. The average mortgage also decreased to
US$86,400 in 2009 from US$96,200 in 2008. Most demanded are mortgages
with 5-year fixed interest mortgage rates, which account for 43% of all
mortgages. The average interest rate of these mortgages remains high at
5.55%. The mortgage banks expect a modest market growth in 2010. The
building savings banks lent approximately US$3.5bn in 2009, down from US$4bn
in 2008. Building savings loan market decreased by 10-12% year-on-year, after
record increases in previous years and is expected to remain stable in 2010.
• The private pension market in the Czech Republic continues to grow, although at
a slower pace. The country has one of the highest levels of private pension
participation in the world, with 4.4 million clients (over 60% of the productive adult
population). The number of participants grew by 3% and assets increased by 5%
in 2009. The average monthly savings remain low at US$25 (only 2% of gross
income) and need to increase considerably to be able to provide adequate
income to retired. New regulations emphasize marketing pension funds to firms
rather than individual employees.
• Despite the financial crisis, the Czech insurance market was marked by further,
although more moderate growth. In the 2009, the insurance market grew by 2%
from 2008 (compared to a much higher growth of 6.2% in 2008). Life insurance
accounted for most of the increase with a 4% growth. In the structure of the
insurance market non-life insurance continues to predominate (60:40), which is
contrary to the 40:60 split found in developed countries, where life insurance has
a higher share. By Western standards, the Czech Republic is still underinsured.
Although the insurance penetration increased from 2.9% to 3.8% over the last 10
years, it still lags far behind the EU average. There is a potential for further
growth in life insurance. Non-life insurance is more saturated, potential for
growth exists in specialized insurance products, such as credit insurance,
management liability insurance, and insurance against the loss of job.
Resources Return to top
Czech Banking Association (CBA)
http://www.czech-ba.cz/homepage