Financial accounts statistics – commentary

for 2Q 2024

The overall situation

Simultaneously with the publication of the results as of 30 June 2024, the revised quarterly financial accounts of the Czech Republic from 2016 to the present are also being published. This is a regular data revision (a benchmark revision) conducted by EU countries every five years. It is coordinated by Eurostat and the European Central Bank. The revision of a longer time series was mainly due to changes in the data sources, the calculations of new variables and revisions of individual estimates. A key priority of the benchmark revision was to ensure maximum harmonisation of the quarterly financial accounts data with the CZSO’s national accounts and the balance of payments and international investment position statistics.

The total value of the financial assets in the Czech economy rose by 0.9% in 2024 Q2. This represented a year-on-year increase of 7.7%. The total value of financial assets was favourably affected by transactions, which totalled CZK 389.1 billion. The value of financial assets increased by a further CZK 68.2 billion as a result of revaluation. Other changes (CZK 28.6 billion) also acted in the same direction. All economic sectors, except for the rest of the world – where growth in financial assets and liabilities fluctuated near zero – contributed to varying degrees to the growth in financial assets. The largest increase in financial assets was recorded by households. In second place were financial institutions, although their contribution was 40 per cent lower in volume. This was followed by general government and non-financial corporations. On the liabilities side, the non-financial corporations sector and financial corporations recorded the highest growth, accounting for almost 90% of its current growth. The contribution of households saw a slight increase compared to the previous quarter, but it remains of only peripheral significance. The contribution of general government also remains relatively low for the second consecutive quarter.

The shares of the individual financial instruments in total financial assets and liabilities recorded less pronounced changes than in the previous quarter. The share of total deposits rose only marginally (0.1 pp) in quarter-on-quarter terms, but shifts in their structure were reflected in the most significant change in shares of the individual financial instruments (0.5 pp for transferable deposits and -0.4 pp for other deposits). Additionally, the share of equity increased (0.3 pp) at the expense of long-term debt securities and financial derivatives. The shares of other financial instruments were virtually the same as a quarter earlier. There are no substantial changes in terms of sector structure. The share of the rest of the world fell by 0.2 pp on both sides of the financial balance sheet. On the financial assets side, the share of households increased by 0.2 pp. Changes in the other economic sectors fluctuated around zero. 

Chart 1 – Breakdown of financial instruments in the economy
(in %)

Chart 2 – Breakdown of financial assets and liabilities by sector
(in CZK billions)

Households again strengthened their net creditor position. However, the increase in net financial assets was lower compared to the previous quarter. The net financial position of general government also improved, due solely to local government. Following four quarters of significant declines in net financial assets, the net position of the rest of the world also increased slightly. By contrast, an increase in the net debtor position was recorded for non-financial corporations, and to a lesser extent, for financial institutions.

Non-financial corporations

A significant decrease in the growth rate of financial assets from 4.4% to 0.7%, accompanied by an only slight fall in liabilities (1.4%), led to a deterioration in the sector’s net financial position. The value of negative net financial assets increased by 2.3% due mainly to negative market revaluation. A surplus on financial transactions and other changes had a marginal effect.

Financial assets were affected mainly by a substantial increase in short-term loans. These were almost exclusively provided within the sector. The growth in the value of other equity was driven by other changes consisting in the reclassification of a financial instrument (a transfer from unlisted shares). The value of transferable deposits held primarily with non-residents – and to a lesser extent, with commercial banks – increased. The transaction increase in long-term debt securities concerned mainly the purchase of issues of non-financial corporations. The growth in financial assets was dampened by a drop in the value of financial derivatives, which reflected both a transaction decrease and their negative revaluation. The decrease in long-term loans was mainly driven by a decline in intersectoral loans. The decline in the value of unlisted shares reflected other changes (a transfer to other equity). A transaction decrease in value was also recorded for other deposits held with commercial banks. The liabilities side was affected by the increase in the value of unlisted shares and other equity due to their positive revaluation (increase in equity value). The value of other liabilities and long-term debt securities also increased. The rise in short-term loans reflected an increase in intersectoral loans, which was partly offset by a decrease in loans from non-residents. The growth in the value of listed shares was due to positive revaluation. The increase in liabilities was offset by a decrease in long-term loans and a solely transactional decline in financial derivatives.

Turning to the structure of the financial balance sheet, the share of financial derivatives, unlisted shares and long-term loans decreased in favour of short-term loans and other equity on the financial assets side. On the liabilities side, there was a visible decline in the share of long-term loans, offset by an increase in shares and other equity.

Chart 3 – Breakdown of financial assets and liabilities of non-financial corporations
(in CZK billions)

Financial corporations

Compared to the previous quarter, the shift in financial assets and liabilities was significantly more moderate (0.6% and 1.0% respectively). The net financial position of the sector has worsened after four quarters of favourable developments. The growth in negative net financial assets (9.0%) was due solely to negative net financial transactions.

The increase in financial assets was driven by the rise in transferable deposits, particularly vis-à-vis non-residents. The number of long-term loans continued to rise. Listed shares recorded a transaction increase in value. By contrast, the growth in unlisted shares was solely due to their positive revaluation. A significant increase in value was also recorded by investment fund shares and units. The growth in financial assets was dampened by a decline in the value of debt securities. The value of other deposits also declined, specifically those held abroad. The decrease in the value of financial derivatives was driven by negative transactions, which were partly offset by their positive revaluation. On the liabilities side, there was an increase in transferable deposits, half of which were made up of deposits of households. The value of short-term debt securities increased, primarily in the portfolio of the rest of the world. The value of investment fund shares and units continued to grow. However, their growth rate slowed compared to the previous seven quarters. The increase in liabilities was offset by a significant decline in other deposits and, to a lesser extent, other accounts payable.

As regards sub-sectors, only captive financial institutions and, to a lesser extent, insurance corporations improved their net financial positions. For the former, this was due to the significantly faster growth in financial assets than in liabilities. In the latter case, the improvement resulted from a bigger decrease in the value of liabilities than financial assets. The deterioration in the net financial position of the central bank was due to a larger decrease in financial assets than in liabilities. The faster growth of liabilities compared to financial assets led to a worsening of the negative net financial position of deposit-taking corporations except the central bank, non MMF investment funds, and other financial intermediaries. The net financial position of financial auxiliaries and pension funds was affected by an increase in liabilities and a decline in financial assets.

Chart 4 – Shares of sub-sectors in financial assets and liabilities of the financial sector
(in %)

Chart 5 – Breakdown of financial assets in selected sub-sectors of the financial corporations sector
(in %)

General government

The faster growth of financial assets compared to liabilities (2.7% and 0.4% respectively) led to an improvement in the net financial position of general government. Negative net financial assets fell by 5.2% quarter on quarter, almost exclusively due to positive revaluation. The current balance sheet of the sector was positively affected only by local government, whose net financial assets recorded a quarterly increase of 11%.

Financial assets were affected mainly by a rise in the value of transferable deposits. Deposits allocated within the sector and those with commercial banks increased to almost the same extent. The value of listed shares rose due to revaluation. Other liabilities also increased slightly. Conversely, the value of long-term loans decreased due to a significant transaction decrease in loans to non-financial corporations. Other financial instruments had only a marginal effect in the quarter under review. On the liabilities side, there was a substantial increase in transferable deposits allocated within the sector. The growth of trade credits and advances continued, but the current increase was significantly lower compared to the previous quarter. The increase in liabilities was dampened by a decrease in the value of long-term debt securities, which was driven mainly by negative revaluation, and, to a lesser extent, a transaction decrease. While the rest of the world recorded the largest transaction decline, financial corporations recorded the largest negative revaluation.

Chart 6 – Breakdown of financial assets and liabilities of general government

(in CZK billions)

Households

Net financial assets increased by 1.9% quarter on quarter amid growth in both financial assets and liabilities (of 1.8% and 1.4% respectively). Net financial assets were favourably affected mainly by a surplus on financial transactions and, to a lesser extent, by non-transaction effects in the form of revaluations. Other changes were of secondary importance.             

The financial assets side was affected by an increase in deposits, driven by growth in transferable deposits. This was an exceptionally significant rise in this segment of deposits from the long-term perspective. By contrast, the value of other deposits decreased after ten quarters of uninterrupted growth. The value of investment fund shares and units increased again. However, the quarter-on-quarter increase was only one-half of that recorded in the previous two quarters. The increase in value was determined chiefly by transactions, while the effect of non-transaction changes was considerably smaller. Investment was again channelled into both domestic and foreign funds. While the increase in the value of unlisted shares was driven by both transactions and positive revaluation, the growth in other equity was due solely to positive revaluation. The liabilities side was affected by an increase in the growth rate of loans, which is their key component (rising from 1.0% to 1.6%). Deposit-taking corporations except the central bank remain the key lender (with a share of almost 97%). The growth in their loans increased to 1.6% quarter on quarter. The breakdown of loans was also unchanged, with long-term loans accounting for the largest share (98%).

Chart 7 – Breakdown of financial assets and liabilities of households

(in CZK billions)

Rest of the world

The value of financial assets and liabilities remained virtually flat at the 2024 Q1 level. Net financial assets rose slightly (2.4%) due to the opposite effects of a relatively significant surplus on revaluation and a deficit on financial transactions and other changes.

Financial assets (0.1%) were positively affected mainly by an increase in short-term debt securities, which was due to a transaction increase in domestic bank bonds owned by non-residents. Other equity increased in value, due mainly to positive revaluation, while the volume of transactions remained at the same level as in the previous quarter. The growth of trade credits to domestic non-financial corporations continued, but at a significantly lower level compared to the previous quarter. The increase in financial assets was offset by a decrease in loans to non-financial corporations. The decrease in the value of other deposits was due to a significant transaction decline in other deposits received by the central bank from abroad. Financial derivatives also recorded a transaction decrease in value. The decline in the value of long-term government debt securities held by non-residents was also driven by negative transactions. The key factor on the liabilities side (-0.1%) was the transaction decrease in foreign debt securities held by the central bank. The value of other deposits held abroad by the central bank also dropped significantly. The value of financial derivatives decreased again due primarily to transactions. The decline in unlisted shares was driven by other changes consisting in a partial shift into other equity holdings. The decline in liabilities was reduced by a rise in the central bank’s transferable deposits abroad. Other equity recorded non-transaction growth in value due to the aforementioned other changes. By contrast, listed shares recorded a transaction increase in value. The increase in the value of investment fund shares and units was also driven by transactions.

Turning to the structure of financial assets, the share of loans and deposits decreased in favour of other equity and debt securities. On the liabilities side, the share of debt securities and financial derivatives decreased, while the share of transferable deposits and other equity increased.

Chart 8 – Breakdown of financial assets and liabilities of the rest of the World

(in CZK billions)