Czech banking sector records net profit of CZK 55.7 billion in 2010

The Czech banking sector recorded a net profit of CZK 55.7 billion in 2010, amid deteriorating loan portfolio quality caused by the economic situation. This represents a decrease of 6.8% from the CZK 59.7 billion net profit posted in 2009. The capital adequacy of the sector increased to 15.51% at the end of 2010, from 14.11% a year earlier.

The total assets of the Czech banking sector amounted to CZK 4.2 trillion at the end of December, representing a year-on-year increase of 2.4%.

“The Czech banking sector has sufficient funds, liquidity and capital. In addition, it is resilient to shocks. This means that the domestic banking sector is not in itself a source of risks to the economy. The CNB will take pains to ensure that this remains the case. It will keep a close eye on dividend payments and capital increases in individual banks to make sure that capital adequacy remains at a safe level,” said CNB Vice-Governor Vladimír Tomšík.

According to the latest stress tests, conducted in February 2010, the Czech banking sector is sufficiently resilient to potential highly adverse effects. The stress tests, carried out on 2010 Q4 data, showed that the capitalisation of the entire sector would remain above the regulatory minimum of 8% even in the event of a sudden drop in domestic and external economic activity in 2011 H2.

At the end of 2010 the CNB registered 41 banks and foreign bank branches, of which 17 were banks, 5 building societies and 19 foreign bank branches.

Marek Petruš
CNB spokesman