CNB makes large profit in 1999

The Czech National Bank made a profit of CZK 32.4 billion in 1999. The central bank's profit and loss statement was submitted to the Czech Parliament today as required by law.

The central bank's profit is as much as 90% dependent on the costs associated with pursuing monetary policy and on the level of exchange rate differences, owing to changes in the koruna valuation of the CNB's international reserves.

During 1999, the koruna's nominal exchange rate weakened against the euro by around 3.16% and against the US dollar by around 20.51%. That gave rise to an increase in the koruna value of the international reserves. The resulting exchange rate profit stood at CZK 31.5 billion as of 31 December 1999.

The CNB last year had expenses of CZK 85.9 billion and revenues of CZK 118.3 billion. The expenses were due largely to provisioning for the receivable from the Slovak National Bank. The obligation to provision for the full amount of the part of the receivable as yet uncovered reduced the CNB's profit by CZK 9.4 billion. On the other hand, the CNB saw an extraordinary revenue from the sale of its holding in ČSOB (net proceeds: CZK 14.8 billion). Its net revenues from administering the international reserves stood at CZK 15.4 billion

The profit that the CNB made in 1999 will be used in the maximum possible amount to cover the 1998 loss of CZK 50.740 billion. In line with the principles of financial management and the profit distribution plan for 1999, the entire profit will thus be used to safeguard the bank's needs.

Once this has been settled, an accumulated loss from past years of CZK 18.4 billion will remain on the CNB's balance sheet.

In compliance with Act No. 6/1993 Coll. on the Czech National Bank, the financial statement has been audited for correctness by the independent auditing firm PricewaterhouseCoopers Audit, s.r.o and has been approved without reservation.

Milan Tománek
CNB spokesman