Czech banks and insurance companies show remarkable resilience to the impacts of the current economic crisis.
Czech banks and insurance companies present themselves as solidly capitalized to face even more adverse economic scenarios. This strength is evident from the results of the recent supervisory stress tests conducted by the Czech National Bank (CNB) and published last Monday. These periodic evaluations carried out in collaboration with a selection of banking and insurance institutions covering over 90% of the Czech market, showcase the sector’s robustness.
The CNB subjected banks to a series of stress tests, evaluating risks related to credit, market, and operations, as well as income from interest and other sources. In both base and adverse scenarios, the capital adequacy of the banks would not fall below 17.5%, well above the minimum regulatory requirement of 8%. The CNB stated: “The current banking sector possesses a substantial capital buffer, enabling it to absorb even severe negative shocks.”
Similarly, tests conducted on insurance companies highlighted a sufficiently capitalized sector capable of withstanding significant variations in risk factors. In adverse scenarios, the solvency ratio would remain a strong 156% for both market and insurance risks, thus surpassing the regulatory requirement of 100%.
The CNB commented: “Among the monitored risks, fluctuations in the value of equity investments and government bonds have had the greatest impact on insurance companies.”
The Czech National Bank performs supervisory stress tests every two years in collaboration with a selected group of banking and insurance institutions, assessing the individual resilience of each entity. In the latest test cycle, 12 banks, representing 91% of the Czech Republic’s banking sector assets, and 18 insurance companies, together covering 99.9% of the market in terms of gross premiums issued, were involved.
In addition to supervisory stress tests, the Czech National Bank also conducts macroeconomic stress tests to assess the overall resilience of the financial sector. The results of these assessments are published twice a year as part of the financial stability report. The latest results of the macroeconomic stress tests, released by the central bank in June, confirm the overall resilience of the financial sector.
Fonti: https://www.novinky.cz/sekce/ekonomika-10
Fonte immagini: https://pixabay.com/
Fonte grafica: https://storyset.com/
