By Sean Carney, Dow Jones Newswires
VIENNA (Dow Jones)--The Czech economy should expand by roughly 2% in 2010, yet while banks are well capitalized and able to withstand a potential rise in defaults, consumer loans remain a worry, the deputy governor of the country's central bank said Wednesday.
"I'm worried about consumer loans" amid rising unemployment, though domestic mortgage borrowing remains conservative and first time home buyers remain a stable, relatively low risk segment, Miroslav Singer said at a conference.
Regarding corporate lending, the economic crisis is leading to banks lending more carefully than before, yet the banks have substantial reserves keeping them in good shape."It's been pretty visible that banks are keeping their profitability," Singer said.
The Czech economy remains ready to grow thanks to the country's still strong export sector, but being a small and open economy, external shocks remain a risk to growth, Singer said.
Singer added that exports will probably be drivers for economic growth because domestic demand is slightly muted as Czech consumers are economizing somewhat.