The Czech National Bank (CNB) has announced an accounting profit of CZK 55.1 billion for the year 2023, following the approval of its financial statements and financial report by the CNB Bank Board on March 20.
A press release from the CNB attributes this profit to restrictive monetary conditions. It was noted that at the beginning of 2023, the monetary policy rate reached a peak unseen in 24 years. The bank also acknowledged the significant cost burden associated with liquidity deposits at the central bank.
The same press release further elaborated on these costs, stating that interest paid to financial institutions for depositing surplus liquidity at the central bank and for maintaining required reserves escalated from CZK 28 billion in 2022 to CZK 187 billion. This surge, according to CNB, signifies the highest annual domestic monetary policy-making cost ever borne by the central bank.
In terms of allocation of profits, CNB intends to use all of its earnings from 2023 to offset some of the accounting losses accrued over previous years. According to Governor Aleš Michl, the current CNB Bank Board inherited a cumulative loss of CZK 487 billion—the largest ever in the history of the central bank. In response to this predicament, Michl said that in 2023, immediate measures were taken to curtail costs, including a reduction in staff by 5.1% and a decrease in executive directors reporting to the board from 17 to 14.
Michl was quoted as saying: "In this way, we erased part of the past loss last year." He added: "But our asset and liability structure is not yet such as to allow us to 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 their expected return. That’s why we are buying gold. That’s why we are considering increasing the ratio of equity holdings and making other changes."