CNB’s 2020 profit to help lower accumulated loss of previous years

The Czech National Bank recorded a profit of CZK 91.7 billion in 2020. As required by law, it used the profit to cover part of its accumulated loss of previous years, which thus fell to CZK 37.5 billion. So says the CNB’s 2020 financial report approved by the CNB Bank Board today.

As a result of the coronavirus pandemic and its effect on the global economy, the evolution of the CNB’s profit in the course of 2020 can be described as volatile. The CNB’s income was driven mainly by international reserves revenues, which stood at CZK 97.5 billion. The largest part of the profit – CZK 69.2 billion – was recorded by the bond portfolio.

The koruna exchange rate also exhibited substantial volatility. This, in turn, was reflected in the bank’s interim profit via valuation differences. Thanks to the stabilisation of the exchange rate at the close of 2020, however, valuation differences on foreign currency assets and liabilities unusually had a lower effect on the final profit than in other years, contributing CZK 8.5 billion.

The pandemic led to a fundamental change in the domestic monetary conditions. In order to mitigate the impacts of this external shock to the economy, the CNB reacted by easing monetary conditions in three gradual steps. The most recent cut in the key monetary policy rate to 0.25% was approved by the CNB Bank Board on 7 May 2020. The lowering of monetary policy interest rates was reflected in a year-on-year decline of CZK 30.1 billion in interest paid to commercial banks on their deposits at the central bank.

The CNB used its 2020 profit to lower its accumulated loss of previous years. The rest of the loss (CZK 37.5 billion) remains in the CNB’s balance sheet as accumulated loss from previous accounting periods. The CNB expects to cover the accumulated loss from its future profits.

The CNB will publish its annual financial report for 2020 and its financial statements for 2020 by the end of March 2021 after delivering them to the Chamber of Deputies.

Markéta Fišerová
Director of the Communications Division and CNB Spokesperson