The Parliamentary Supervisory Council has confirmed the Bank of Finland's financial statements for 2011. Upon the proposal of the Board of the Bank of Finland, the Parliamentary Supervisory Council decided that EUR 185 million be transferred to the State. Last year, the Bank transferred EUR 195 million to the State.
The Bank of Finland's profit for financial year 2011 totalled EUR 254 million (2010: EUR 283 million). As in the previous year, the Bank of Finland increased its general provision by EUR 100 million. This and other provisions serve as a buffer against foreign exchange rate, interest rate and credit risks and ensure the Bank's ability to carry out its tasks. Provisions against risks totalled EUR 2,488 million (2010: EUR 2,289 million).
The Bank of Finland's income consists primarily of investment income on foreign reserves and other own financial assets as well as interest income on banknotes and monetary policy items.
In 2011 net interest income amounted to EUR 592 million (2010: EUR 526 million). Despite the low level of interest rates, net interest income was higher than in 2010 due to a considerable increase in monetary policy items and particularly in intra-Eurosystem claims. At the end of 2011 those claims related to the TARGET payment system were EUR 66 billion (2010: EUR 20 billion). They originated in deposits by banks operating in Finland in the Bank of Finland. Interest income accrued on monetary policy operations, such as the Securities Markets Programme, was also higher than in the previous year. Part of net interest income consists of Eurosystem's joint interest income and expense, and therefore the Bank of Finland returned EUR 76 million of this income to the Eurosystem (2010: EUR 33 million).
The Bank of Finland uses the income accrued to cover its operating expenses and provisions. The result for 2011 is also strained by a supplementary transfer of EUR 32 million (2010: EUR 10 million) to the pension fund to cover pension liabilities by 100%. Operating expenses totalled EUR 93 million (2010: EUR 92 million). Staff costs, EUR 51 million (2010: EUR 51 million), include the Financial Supervisory Authority's staff costs, which were EUR 17 million (2010: EUR 17 million).
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 the use in accordance with the needs of the State. However, the law provides that otherwise can be decided on profit distribution if this is justifiable because of the Bank's financial condition or the size of the reserve fund.
In its profit distribution proposal, the Bank of Finland Board assessed that the Bank's capital adequacy is sufficient to cover the risks relating to the performance of the Bank's tasks. As in the previous year, and on the basis of these considerations, a larger share of the profit from 2011 will be made available for the State than the statutory 50%.
Notes on the Bank of Finland's financial statements will be published as part of the Annual Report 2011 on 2 April 2012.
Annexes: Profit and loss account, balance sheet and charts on key items. (PDF)
For further information, please contact:
Pentti Hakkarainen, Deputy Governor of the Bank of Finland, tel. +358 10 831 2002.
Pirkko Pohjoisaho-Aarti, Head of Administration, tel. +358 10 831 2435.