Capital adequacy and the role of profit in it

23.19 %
Total capital ratio
21.03 %
CET1 capital ratio

CBA Commentary

The overall capital ratio in Q4 2025 fell to 23.2% compared to a ratio of 23.5% in the previous quarter. It is thus above the 18.6% average ratio of the pre-pandemic period 2015-2019 and the previous average over the past five years was 23%.
For the highest quality capital, CET1, the capital to risk-weighted assets ratio of the banking sector is 21%, compared to 21.3% in the previous quarter, and is thus above the 17.7% ratio of the pre-pandemic period 2015-2019. The average over the past five years was 21.1%.
The banks' retained earnings (part of the highest quality capital CET1) of CZK 423bn represent 58% of total bank capital, which reached CZK 733bn in Q4 2025. Retained earnings accounted for 52% of total capital in the pre-Covidian quinquennium, while in the last five years this share was 57%.

Capital adequacy and the role of profit in it

% of risk-weighted assets

CBA Monitor
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Source of primary data

CNB ARAD

Category

Banking sector

Data frequency

Quarterly

Note

Total capital = Tier 1 (CET1 + AT1) + Tier 2.
Tier 1 capital is able to cover losses more easily, which mainly includes CET1 capital (composed of equity, retained earnings and reserves) and AT1 debt capital (which can cover losses more easily than Tier 2 capital).
The data also include data for banks and branches of foreign banks providing services in the Czech Republic and data for branches of banks operating abroad.

Related Charts

Banking sector assets
Profitability of the banking sector

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Comments

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The current growth in credit activity is mainly driven by mortgage lending, on which the countercyclical buffer has a more limited impact. Although there was also a recovery in lending activity to non-financial corporations last year, these are still rather early signs of recovery and the economy needs stronger investment activity outside construction. These reasons are probably behind the central bank's decision to leave the countercyclical buffer in banks' capital unchanged at 1.25%, but with the caveat of a growing likelihood of a future increase.

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