PARIS (Reuters) – The Banque de France (BdF) reported on Wednesday a net profit of 4.4 billion euros for 2022, which it intends to set aside to absorb possible future losses related to to rising interest rates.
Most major central banks have already announced or said they expect losses as the drastic hike in interest rates reduces the value of the bonds they bought in recent years when inflation was too low.
Both the European Central Bank (ECB) and the Bundesbank recently announced losses for 2022.
For its part, the BdF explained that its monetary income had continued to grow in 2022, to 4.2 billion euros, driven by the increase in income from securities resulting from the purchase programs (APP and PEPP), 8% of them being inflation-linked bonds, which hit an all-time high last year.
This compensated for an increased burden, during the second part of the year, of the remuneration of the banks’ excess liquidity due to the rise in key rates.
The net profit of 4.4 billion euros will be integrated into the fund for general risks which will thus reach 16.4 billion euros.
“The reserves should allow us to maintain balanced results over the next few years without seeking recapitalization from the state shareholder,” BdF Governor François Villeroy de Galhau told reporters.
(Report Leigh Thomas; Blandine Hénault for the , edited by Kate Entringer)
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