Bank of Finland to transfer EUR 195 million to the State

The Parliamentary Supervisory Council has confirmed the Bank of Finland’s financial statements for 2010. Upon the proposal of the Board of the Bank of Finland, the Parliamentary Supervisory Council decided that EUR 195 million be transferred to the State. Last year, the Bank transferred EUR 260 million to the State.

 

The Bank of Finland’s profit for financial year 2010 totalled EUR 283 million. In 2009 the profit for the financial year was EUR 420 million. The low level of interest rates was expected to weaken net interest income. However, interest income on securities purchased under the Securities Markets Programme (SMP) and an increase in claims boosted net interest income by EUR 8 million from a year earlier.

 

The Bank of Finland’s net interest income consists of interest income on financial assets and on monetary policy items. Interest income on financial assets is based on banknotes put into circulation and own funds. Net interest income totalled EUR 527 million, of which EUR 136 million was derived from monetary policy items and EUR 391 million from income on financial assets. Net interest income is expected to decrease in the current year owing to the prevailing low level of interest rates.

The Bank of Finland’s profit for the financial year decreased from the previous year. This was mainly due to a EUR 100 million increase in the Bank’s general provision for potential losses. The Bank’s profit was lower also because the ECB’s income on banknotes and its interest income on SMP securities was not distributed to the Eurosystem’s national central banks, as the income was used to increase the ECB’s provisions. Lower operating expenses had a positive effect on the Bank of Finland’s result.

 

In deciding the profit distribution, the Bank of Finland Board assessed that the Bank’s capital adequacy is currently sufficient to cover the risks relating to the undertaking of the Bank’s tasks.

 

According to the Act on the Bank of Finland, half of the Bank’s profit shall be transferred to the reserve fund and the remaining profit shall be made available for use in accordance with the needs of the State. However, the Act provides that the Parliamentary Supervisory Council may decide on the use of the profit for other purposes if this is justifiable because of the Bank’s financial condition or the size of the reserve fund. As in the previous year, and in light of the Bank’s current financial situation, it is possible to make a larger share of the profit from 2010 than the statutory 50% available for the State.

 

The Bank of Finland’s financial statements are released as part of the Bank’s Annual Report which is to be published on 1 April 2011.