CNB records a profit of CZK 55.1 billion in 2023

The Czech National Bank (CNB) recorded an accounting profit of CZK 55.1 billion in 2023, as stated in the financial statements and financial report approved by the CNB Bank Board at its meeting on 20 March.

The CNB will use the entire profit to partially cover its accumulated accounting loss of previous years.

“The current Bank Board inherited the bank’s largest ever cumulative loss: CZK 487 billion. The first step we took immediately in 2023 was to streamline our operations. We reduced the number of employees by 5%. We also cut the number of executive directors reporting directly to the Bank Board from 17 to 14. In this way, we erased part of the past loss last year,” said CNB Governor Aleš Michl, adding, “But our asset and liability structure is not yet such as to allow us generate a profit on a more sustained basis, and we need to continue to make changes. In particular, we are going to diversify our assets and boost the expected return on them. That’s why we are buying gold. That’s why we are considering increasing the ratio of equity holdings and making other changes. We will communicate and explain those changes primarily in our annual reports.”

The CNB’s profit was affected by the restrictive monetary conditions – the push to return inflation to 2% was strongly reflected in its costs. The central bank entered 2023 with the highest monetary policy rates since May 1999. This, coupled with the size of the financial sector’s liquidity deposits at the central bank, was a major cost burden. The interest paid to financial institutions for depositing their surplus liquidity at the CNB and associated with the maintenance of required reserves rose by CZK 28 billion year on year to CZK 187 billion, the highest annual domestic monetary policy-making cost incurred in the history of the independent CNB.

The returns on all the main components of the international reserves were positive. The prices of the CNB’s financial assets also mostly rose. Bond and share prices surged at the year-end. As a result, the CNB achieved an accounting return of CZK 207 billion on its international reserves, with the equity portfolio accounting for around half of this amount. The weaker exchange rate of the Czech koruna at the end of 2023 fostered an exchange rate gain of CZK 38 billion.

As well as bringing domestic inflation down substantially, the CNB Bank Board delivered on its pledge to cut operating expenses. The efficiency drive was not limited to salaries – the CNB also reduced the number of job positions by 5.1% year on year. The rationalisation of the central bank’s activities also involved a decrease in the number of departments from 17 to 14.

The CNB has used the entire 2023 profit to cover its accumulated accounting loss of previous years. The process of erasing the loss will continue over the long term. This issue does not currently have any bearing on the CNB’s financial independence and credibility, which are very high even by international standards.

The CNB will publish its annual financial report and financial statements for 2023 by the end of March 2024 after delivering them to the Chamber of Deputies.

Štěpánka Filipová
CNB spokesperson