PRAGUE, Oct 24 (Reuters) – The Czech Central Bank’s increase in minimum reserve requirements from next year will likely lead banks to lower deposit rates, a top Moneta Money Bank (MONET.PR) source said. CEO said Thursday Opens in a new tab.
The Czech National Bank (CNB) decided this month to double banks’ minimum reserve requirement (the percentage of debt that banks must, on average, hold with the central bank) from 2% to 4% starting next year. .
The reserves are held interest-free at the CNB after policymakers stopped paying interest on minimum reserves last year, following a similar move by the European Central Bank.
MONETA estimates that the increased requirements will reduce annual net interest income by 200 million to 300 million crowns ($8.6 million to $12.9 million) from 2025 onwards. On Thursday, it maintained its forecast for next year’s net profit of 5.3 billion crowns.
“There will be additional pressure on deposit pricing. We will see 10 to 15 basis points removed from deposit pricing,” MONETA CEO Thomas Spaney said on an earnings call.
He said costs would have to “trickle down to the interest offered” on deposits, but added that he did not expect such an impact on the lending market.
The CNB said this month’s decision was aimed at reducing the costs of implementing monetary policy.
($1 = 23.3530 Czech Crowns
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Reporting: Jason Hovet Editing: Mark Potter
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