Fitch: Czech banks resilient

Fitch Ratings said in a new report that the Czech banking sector performance has proved generally resilient to the challenging operating environment, particularly in comparison with many central and eastern European economies.

The impact of the recession has so far been manageable and helped by the large banks' relatively sound financial fundamentals and franchises, the agency said.

The banking sector performance was helped by better macroeconomic fundamentals than those in the central and eastern European regions, low loan-to-deposit ratios and low reliance on external funding sources, diversified earning sources and a virtual absence of structural imbalances common to some regional peers mainly stemming from foreign-currency lending, Fitch said.

Nevertheless, large banks remain vulnerable to high single-borrower concentration and high exposure to the real estate sector, the agency said.

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