Capital adequacy and the role of profit in it

CET1 capital ratio

Capital adequacy and the role of profit in it

CZK billion
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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 the banks' total 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%.
Source of primary data
CNB ARAD
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.
Category
Banking sector
Data frequency
Quarterly
Related Charts
Banking sector assets
Profitability of the banking sector
Comments
Loans are mainly driven by mortgages, which is why the CNB left the countercyclical reserve at 1.25%, but with the risk of an increase ilustrační foto
Loans are mainly driven by mortgages, which is why the CNB left the countercyclical reserve at 1.25%, but with the risk of an increase
5. 3. 2026
5 min. reading
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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Higher house prices spark richer debate over central bank macroprudential policy than first appears ilustrační foto
Higher house prices spark richer debate over central bank macroprudential policy than first appears
15. 12. 2025
7 min. reading
Comment by Jaromír Šindel, Chief Economist of the CBA: According to the Czech Statistical Office, realised prices of older flats in the Czech Republic rose by 3.7% quarter-on-quarter in the third quarter, which exceeds income growth for the seventh quarter already and maintains the too brisk annual pace of property prices at around 16%. Higher property prices are also making their way into the CNB's macroprudential capital policy settings, with discussion over the (arguably unscary) possible introduction of a sectoral systemic buffer, as well as less intuitive discussions over the role of investment activity by non-financial corporates in setting the countercyclical capital buffer.
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