CNB records a loss of CZK 37.7 billion in 2021

The CNB recorded an accounting loss of CZK 37.7 billion last year. Its accumulated loss of previous years thus increased to CZK 75.3 billion, as stated in the financial statements and financial report approved by the CNB Bank Board today. The 2021 financial result was driven mainly by exchange rate losses due to the appreciation of the koruna at the close of the year.

The domestic currency recorded several fluctuations, especially in the first half of 2021. Although they were much smaller than a year earlier, the koruna appreciated markedly against all reserve currencies in late 2021. Rapid growth in CNB interest rates, especially from September 2021, made koruna investments more attractive and fostered a stronger exchange rate. The final valuation differences in the CNB’s accounts are affected by the allocation of the international reserves into individual currencies and developments in the koruna’s exchange rate against these currencies, which were mixed in 2021. A crucial factor was the appreciation of the koruna against the euro, in which the largest part of the reserves is invested. In 2021 as a whole, the CNB posted an exchange rate loss of CZK 91 billion as opposed to exchange rate gains of CZK 8 billion in 2020.

The size and nature of the contributions of the individual investment instruments within the international reserves were determined by foreign financial market developments. The equity portfolio was the most profitable part of the reserves, contributing a record-high revenue of CZK 111 billion. By contrast, the bond portfolios recorded an overall loss due to a decline in their market price. The positive contribution of international reserves revenues to the financial result was CZK 80 billion last year.

In view of the long-running shutdowns and downturn in the domestic and foreign economies as a result of the Covid-19 pandemic, the domestic monetary conditions remained accommodative for most of the first half of 2021. In reaction to strengthening price pressures at home and abroad, the CNB increased its key interest rate gradually by a total of 3.5 percentage points from mid-2021. This made its monetary operations costlier, generating interest rate expenses paid to commercial banks of CZK 24 billion.

The absence of financial reserves and the accumulated loss of previous years amounting to CZK 37.5 billion made it impossible to immediately cover the accounting loss for 2021. It therefore remains in the CNB’s balance sheet and will be covered from its future profits.

The CNB will publish its annual financial report for 2021 and its financial statements for 2021 by the end of March 2022 after delivering them to the Chamber of Deputies.

Markéta Fišerová
Director of the Communications Division and CNB Spokesperson