Czech National Bank reports record loss of CZK 411.9 billion in 2022

The Czech National Bank (CNB) reported a record loss of CZK 411.9 billion last year, with a loss of CZK 37.7 billion in 2021. The loss was primarily due to a decrease in the value of the fixed-interest bond and equity portfolios and higher interest yields paid to Czech banks due to increased rates. This information comes from the financial statements released by the CNB on Thursday.

In January, the bank reported a preliminary loss of CZK 411.8 billion. However, not all supplementary operations for 2022 were included in that report. The most significant portion of the financial loss, CZK 207.7 billion, occurred in the foreign exchange reserves management chapter.

In the first half of the year, the CNB experienced an increase in the cost of monetary operations due to rising interest rates. This burdened the bank’s performance with interest costs paid to commercial banks of CZK 159.6 billion, up from CZK 24.4 billion the previous year.

The growth of domestic price levels also impacted the CNB’s operating expenses. The operating performance resulted in a loss of CZK 3 billion, up from CZK 2.6 billion in 2021. The CNB stated in the financial statement that it aims to use money more efficiently by slowing down employee wage growth and freezing the salaries of bank board members.

The cumulative loss of the CNB increased to CZK 487.1 billion. The central bank plans to cover this loss from future profits. The central bank has long emphasized that profit-making is not its primary objective. Its central role is to ensure price and financial stability. Analysts say the loss does not pose a problem for the CNB’s functioning.

The CNB determines monetary policy, oversees financial stability, issues banknotes, and coins, and manages the money supply, payment systems, and bank settlements. It also oversees the banking sector, capital markets, insurance, pension funds, cooperative banks, and electronic money and foreign exchange institutions.