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Ceska Narodni Banka : Update of Financial Stability Report 2019/2020

11/26/2020 | 10:39am EST

CNB press conference on the results of the autumn meeting on financial stability issues

Jiří Rusnok, Governor

Jan Frait, Executive Director, Financial Stability Department

26 November 2020

Contents

  1. Aggregate assessment of risks and overview of CNB's main measures
  2. Assessment of selected risks

Financial stability in November 2020

  • The Czech financial sector maintained high resilience to adverse shocks even during the coronavirus pandemic.
    • The government's stabilisation and support programmes provided liquidity to the real economy and prevented a precipitous wave of credit defaults.
    • The CNB's measures stabilised the debt service of the real sectors and supported the smooth operation of the financial markets.
  • In view of the continuing pandemic, it must be expected that the income of many households and corporations will fall markedly. This will have a sizeable effect on their solvency and, in turn, the results of financial institutions.
  • The banking sector will record a rise in credit risk costs connected with the October termination of the statutory loan moratorium, the gradual phase-out of stabilisation measures and weakened economic activity in the Czech Republic and abroad.
  • Together with a high degree of uncertainty regarding future developments, this will require banks and other financial institutions to act very prudently in managing capital and in their dividend policies.

3

Credit risk in banking sector

  • The government's stabilising measures and the flexibility of the accounting framework are reducing the materialisation of credit risk.
    • Loan impairment losses remain low compared with the global financial crisis.
    • Credit risk costs in the Czech Republic are among the lowest in the EU.

Asset impairment losses

Comparison of cost of risk across the EU, end June 2020

(bp, annualized)

(pb)

120

120

300

250

80

80

200

40

40

150

0

0

100

50

-40

-40

0

08/05

08/08

08/11

08/14

08/17

08/20

GR IE HU CY RO BG ES HR MT SI LV PL DK PT IT SK AT NL BE FR CZ EE DE FI LT SE LU

Impairment/total assets

Total impairment losses

4

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Ceska Narodni Banka published this content on 26 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 November 2020 15:38:03 UTC


© Publicnow 2020
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