The Parliamentary Supervisory Council has confirmed the Bank of Finland’s financial statements for 2014. Upon the proposal of the Board of the Bank, the Parliamentary Supervisory Council decided on the transfer of EUR 137.5 million to the State. Last year, the Bank transferred EUR 180 million to the State. ‘The ECB will continue its accommodative monetary policy and keep interest rates low for an extended period. The low interest rates have had and will continue to have a weakening effect on the central bank’s results,’ stated Bank of Finland Governor Erkki Liikanen.
The Bank of Finland’s profit after provisions totalled EUR 150 million for the financial year 2014 (2013: EUR 239 million). The Bank increased its net general provision by EUR 50 million (2013: EUR 50 million). This and other provisions serve as a buffer against exchange rate, interest rate and credit risks and ensure the Bank’s ability to carry out its tasks under all circumstances. Total provisions against risks amounted to EUR 3,548 million (2013: EUR 3,323 million). ‘The Bank of Finland maintains adequate buffers to guarantee its operations and at the same time aims to ensure its ability to distribute a share of its profits to the State, although the profit can be expected to decrease in coming years,’ stressed Deputy Governor Pentti Hakkarainen.
The Bank of Finland’s income primarily consists of interest income on banknotes and monetary policy items as well as investment income on foreign reserves and other financial assets of the Bank. In 2014, net interest income amounted to EUR 317 million (2013: EUR 542 million). Due to the low level of interest rates and the maturing of the securities purchased under the securities market programme (SMP), interest income continued to decline. At the end of 2014, claims related to the TARGET payment system stabilised at EUR 19.7 billion (2013: EUR 22.2 billion), against EUR 70.6 billion in 2012.
The Bank of Finland uses its income to cover its operating expenses and provisions. Operating expenses minus banknote procurement and an extraordinary repayment of pension fund contributions amounted to EUR 89 million (2013: EUR 89 million). Operating expenses and other income also include the Financial Supervisory Authority’s (FIN-FSA) expenses and supervision fee income. Staff costs included in the operating expenses totalled EUR 50.4 million, of which the Bank’s share was EUR 33.6 million (2013: EUR 33.7 million) and FIN-FSA’s share EUR 16.8 million (2013: EUR 18 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 use in accordance with the needs of the State. However, the law allows for an exceptional profit distribution if justified by 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 related to undertaking its statutory tasks. As in the previous year, and on the basis of these considerations, a share of the profit from 2014 exceeding the statutory 50% will be made available to the State.
Notes on the Bank of Finland’s financial statements have been published today on 25 March 2015 as part of the Bank’s Annual Report.
For further information, please contact Pentti Hakkarainen, Deputy Governor of the Bank of Finland, tel. +358 (0)10 831 2002.