FRANKFURT (Reuters) – The European Central Bank (ECB) said on Thursday it did not make a profit in 2022 as a reversal of a provision for financial risks offset higher interest payments to national central banks and unrealized capital losses on portfolio securities.
Unlike commercial banks, the ECB does not aim to make a profit but generates income by lending to banks or via its portfolio of financial products. Its profits are generally redistributed to the national central banks of the euro zone in proportion to their share in the capital of the ECB.
“The audited financial statements of the European Central Bank (ECB) for 2022 show a profit of zero (compared to 192 million euros in 2021). Therefore, no profit will be distributed to the national central banks of the euro zone”, said the institution said in a statement.
The loss suffered by the ECB before a reversal of the provision for financial risks amounted to 1.63 billion euros, it added.
This drop in performance is mainly explained by interest charges of more than two billion euros related to Target 2 commitments, the real-time payment processing platform managed by the Eurosystem, and by capital losses latent in its equity and dollar portfolios, with rising bond yields.
Provisions fell to 6.6 billion euros after the rise in interest charges.
In 2022, net interest income stood at 900 million euros in 2022, compared to 1.57 billion euros a year earlier.
The ECB estimates the amount of securities held at 457.3 billion euros at the end of December.
(Francesco Canepa, Laetitia Volga)
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