​The Parliamentary Supervisory Council has confirmed the Bank of Finland’s financial statements for 2012. Upon the proposal of the Board of the Bank of Finland, the Parliamentary Supervisory Council decided on the transfer of EUR 227 million to the State. Last year, the Bank transferred EUR 185 million to the State. ‘The Bank of Finland’s strategic aim is to ensure sufficient buffers in the Bank’s activities and enable stable profit distribution to the State. This holds true also for 2012᾽, Governor Erkki Liikanen stated.
The Bank of Finland’s profit after provisions totalled EUR 337 million (2011: EUR 254 million). The 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 under all circumstances. Provisions against risks totalled EUR 3,125 million (2011: EUR 2,488 million). ‘Immediately available provisions cover risks assessed with risk management methods’, stressed Deputy Governor Pentti Hakkarainen.

The Bank of Finland’s income is primarily from investment of foreign reserves and other own financial assets, as well as banknotes in circulation and monetary policy items. Income covers the Bank’s operating costs.

Net interest income totalled EUR 998 million in 2012 (2011: EUR 592 million). Due to the low level of interest rates, interest income on foreign reserves and other own financial assets was lower than in the previous year. By contrast, interest income on the Eurosystem’s monetary policy operations increased considerably from the previous year owing to volume growth. For example, claims related to the TARGET payment system averaged EUR 59 billion in 2012, as banks markedly increased their deposits with the Bank of Finland. Interest income on the Securities Markets Programme (SMP) also increased.

Net interest income includes joint income and expenses within the Eurosystem arising from the conduct of monetary policy. They are adjusted to correspond to each national central bank’s share in accordance with the capital allocation key. The Bank of Finland’s net share in monetary policy interest income increased to EUR 419 million (2011: EUR 281 million).

Redemption of Finnish markka banknotes ended at the end of February 2012. Markka banknotes that were unredeemed and not converted into euro exceptionally increased the Bank’s income by EUR 119 million.

Operating expenses and other income also includes the Financial Supervisory Authority’s (FIN-FSA) expenses and eg supervision fee income. Operating expenses decreased slightly, to EUR 92 million (2011: EUR 93 million). Operating expenses include staff costs, EUR 52 million (2011: EUR 51 million). Other income totalled EUR 47 million (2011: EUR 35 million), of which FIN-FSA’s supervision fee income accounted for EUR 23 million.

According to the Act on the Bank of Finland, half of the Bank’s profit is to be transferred to the reserve fund and the remaining profit made available for the use in accordance with the needs of the State. However, the law allows an exceptional profit distribution if this is justifiable because of the Bank’s financial condition or the size of the reserve fund. The Bank of Finland’s capital adequacy is sufficient to cover the risks relating to the performance of the Bank’s tasks. On the basis of these considerations, it was proposed that a larger share of the profit than the statutory 50% be made available for the State.

Annexes: Profit and loss account, balance sheet and charts for key items (PDF).

For further information, please contact:
Pentti Hakkarainen, Deputy Governor of the Bank of Finland, tel. +358 10 831 2002.