Financial accounts statistics – commentary
for 4Q 2019
The overall situation
Revised data for the previous quarters of 2018 and 2019 are being published simultaneously with the publication of the quarterly financial accounts data of the Czech Republic as of 31 December 2019. This is a regular revision of the quarterly financial accounts data.1
The total value of the financial assets in the Czech economy fell by 0.3% in Q4. The year-on-year growth (of 5.4%) was in line with that seen in the previous quarter. The decrease in financial assets was mainly due to a fall in transactions of CZK 84.3 billion. Non-transaction changes in the form of revaluation and other changes in the volume of assets led to a decrease in the value of financial assets of an additional CZK 40.8 billion. The decline in financial assets was due mainly to financial institutions, specifically commercial banks. General government followed a long way behind. However, the decline in the financial assets of this sector was more than twice as large as in the previous quarter. By contrast, non-financial corporations and households recorded increases in financial assets. The levels recorded by both sectors were extraordinary from the long-term perspective. The rest of the world recorded only a slight increase, practically the smallest in seven quarters. The decline in financial liabilities was due to all economic sectors except non-financial corporations and households. The dominant sector was financial corporations, the decline of which was again due to changes in the commercial banks sub-sector. It was followed by the rest of the world and, some way behind, by general government. By contrast, the liabilities of non-financial corporations continued to grow, albeit to a lesser extent than in Q3. The increase in liabilities in the households sector was the same as in the previous quarter.
The shares of the individual financial instruments in total financial assets and liabilities recorded bigger changes than in the previous quarter. This was particularly true of deposits, whose relatively large quarter-on-quarter decline (of 3.9%) reduced their share by 1.0 pp. Worth mentioning are shifts between transferable and other deposits, whose size, however, is broadly in line with the monitored long-term quarterly changes. Growth in the value of shares and other equity (2.4%) led to an increase of 0.7 pp in their share in the financial structure. The shares of other financial instruments were the same as a quarter earlier. Turning to the sector structure, the share of financial institutions decreased on both sides of the financial balance sheet (by 1.2 pp and 0.3 pp) in favour of non-financial corporations and, in the case of financial assets, households.
Chart 1 Breakdown of financial instruments in the economy
Chart 2 Breakdown of financial assets and liabilities by sector
(in CZK billions)
Households, non-financial corporations and the rest of the world recorded an improvement in their financial position. In all cases, the rate of improvement was extraordinary from the long-term perspective. By contrast, financial institutions showed a substantial deterioration in their financial position. The value of their negative net financial assets virtually doubled quarter on quarter, due mainly to captive financial corporations. Government institutions also recorded a sizeable increase in quarterly negative net financial assets from the long-term perspective.
The sector’s financial assets recorded a quarter-on-quarter increase of 3.3%, due mainly to a transaction increase in short-term loans (of 25.8%) and to a lesser extent also deposits and other equity. A decline in the value of holdings of unlisted shares due to transactions and revaluation prevented a larger increase. The changes in other financial instruments were insignificant. Liabilities continued to grow (by 1.0%), about two-thirds of the increase being due to transactions. The largest increase in value was recorded by other equity, followed a long way behind by unlisted shares and short-term loans. By contrast, the value of debt securities declined. Higher growth in financial assets than liabilities in terms of volume led to a decline in negative net financial assets, solely due to net lending. The impact of revaluation was negative.
The structure of financial instruments and counterparties was broadly unchanged. The shares of debt liabilities and equity in total liabilities remain stable (at 25% and 46% respectively), as does the share of short-term debt liabilities in total debt liabilities (at 33%).
Chart 3 Breakdown of financial assets and liabilities of non-financial corporations
(in CZK billions)
The value of financial assets recorded a quarter-on-quarter decline of 3.5% due to a pronounced transaction decrease in other deposits. The value of loans and long-term debt securities declined to a much smaller extent. The fall was partly offset by an increase in transferable deposits and short-term debt securities. A decrease in other deposits had a negative impact on the liabilities side (of 1.2%). The value of long-term loans also decreased significantly in favour of short-term ones. Other financial instruments showed modest growth on the whole. The increase in the value of negative net financial assets was due almost equally to revaluation and net lending.
The decline in financial assets, accompanied by an increase in deposits on the liabilities side, led to a sizeable rise in negative net financial assets in the central bank sub-sector. Deposit-taking corporations except the central bank recorded deterioration in their financial position, due mainly to a decline in deposits on both sides of the financial balance sheet. The fall in long-term loans under financial assets worsened the financial position of the other financial intermediaries sub-sector. Strong growth in liabilities (shares and other equity and debt securities) coupled with a decline in financial assets led to a significant worsening of the financial position of captive financial corporations. Faster growth in financial assets than liabilities resulted in an increase in net financial assets in the collective investment fund and pension fund sub-sectors. The financial position of insurance corporations also improved.
Chart 4 Shares of sub-sectors in financial assets and liabilities of the financial sector
Chart 5 Breakdown of financial assets in selected sub-sectors of the financial corporations sector
A much larger quarter-on-quarter decline in the value of financial assets than liabilities (of 4.0% and 0.4% respectively) led to a worsening of the sector’s debtor position (of 13.6%) for the first time in 2019. Although this deterioration slowed the previous positive trend, the sector’s financial position improved year on year. The current quarter was negatively affected by all three sub-sectors and by real transactions.
The decline in the value of financial assets was due mainly to a transaction decline in deposits, amid contrary movements in transferable and other deposits. The decline in deposits in this period is usual and is linked with the part-financing of government financial operations. The decline in other accounts receivable was exceptionally large for both central and local government. By contrast, the value of loans increased, due mainly to Treasury operations within the sector, so the impact on the liabilities side was the same. The movements in the other instruments were insignificant. The decline in liabilities was due to repayment of long-term bonds, amid a contrary effect of issuance of new short-term bonds. Other liabilities also recorded a slight increase in value.
Chart 6 Breakdown of financial assets and liabilities of general government
(in CZK billions)
The growth rate of financial assets accelerated significantly in quarter-on-quarter terms (from 1.3% to 3.2%). Amid unchanged growth in liabilities (of 1.6%), this led to a sizeable increase in net financial assets. Net financial assets were favourably affected by both a surplus on financial transactions and revaluation of financial assets.
The increase in financial assets mainly reflected an increase in the value of other equity and unlisted shares, which was due in almost equal measure to revaluation (an increase in own funds at book value) and an increase in transactions. Deposits continued to grow, due to a rise in liquid deposits in the form of transferable deposits. The increase in the value of shares in investment funds was due to revaluation; the volume of transactions was marginal. The growth in reserves in pension plans remains stable. The increase in financial assets was partly offset by a decline in the value of debt securities. The liabilities side has long been determined by growth in loans, whose growth rate was the same as a quarter earlier (1.6%). Deposit-taking corporations except the central bank remain the key lender. Turning to the time structure, long-term loans continued to grow.
Chart 7 Breakdown of financial assets and liabilities of households
(in CZK billions)
Rest of the world
Modest quarter-on-quarter growth in financial assets (of 0.2%) accompanied by a decline in liabilities (of -1.2%) led to the biggest increase in net financial assets in eight quarters (10.0%). The value of net financial assets was positively affected by revaluation, which was only partly offset by negative net financial transactions.
The biggest increase on the financial asset side was recorded by the value of unlisted shares, due solely to revaluation. Slightly slower growth in deposits was accompanied by significant changes in their sector allocation. On the one hand, other deposits deposited with the CNB increased significantly; on the other, other deposits received by commercial banks from abroad declined. The overall growth in financial assets was significantly dampened by a decline in the value of debt securities. Holdings of government bonds and to a lesser extent bank bonds decreased. Investment in corporate issues also recorded a decline. The value of loans likewise fell. The liabilities side was affected mainly by a decrease in deposits, accompanied by a significant change in their time structure at the CNB. Unlisted shares, loans and, due to a transaction decrease in commercial loans provided by non-financial corporations, other accounts payable all declined in value. The fall in liabilities was offset mainly by growth in other equity and listed shares.
The changes in the values of financial instruments were reflected in the structure of the balance sheet. Under financial assets, the share of unlisted shares and deposits increased at the expense of debt securities, and to a lesser extent so did that of loans. Under liabilities, a rise in other equity and debt securities resulted in a decline in the share of deposits and loans.
Chart 8 Breakdown of financial assets and liabilities of the rest of the World
(in CZK billions)
1 In cooperation with the Czech Statistical Office, the CNB is preparing a revision of the quarterly financial accounts for 2020. The revision will be published in June 2020 together with the data for the first quarter of 2020. The published data will be aligned with the revision of the national accounts and the Czech Republic’s balance of payments and international investment position. This “benchmark” revision (a regular exceptional data revision) is coordinated by Eurostat and the European Central Bank with the countries of the EU. The revision will cover the quarterly financial accounts time series since 2004.