The Parliamentary Supervisory Council has confirmed the Bank of Finland's financial statements for 2016. Upon the proposal of the Board of the Bank, the Parliamentary Supervisory Council decided that EUR 91 million be transferred to the State. Last year, the Bank transferred EUR 98 million to the State. In total, EUR 1.9 billion has been transferred to the State since the beginning of 2007.
The Bank of Finland's profit after provisions totalled EUR 131 million (2015: EUR 146 million). The Bank increased its general provision and provision against real value loss by EUR 101 million (2015: EUR 100 million), taking into account foreign exchange rate, interest rate and credit risks. Total provisions against risks amounted to EUR 3.9 billion (2015: EUR 3.7 billion). 'The prevailing low interest rates reduce the Bank's financial result. Adequate risk buffers ensure the Bank's ability to carry out its tasks under all circumstances,' stated Board Member Marja Nykänen.
The Bank of Finland's income consists primarily of interest income on banknotes and the Eurosystem's monetary policy items as well as investment income on foreign reserves and other financial assets of the Bank. In 2016, net interest income amounted to EUR 469 million (2015: EUR 310 million). The increase in net interest income was particularly driven by interest income on monetary policy items: in an environment of negative interest rates, commercial banks have paid interest on deposits with the Bank of Finland. On the other hand, interest income and expenses on the Bank's own financial assets decreased due to the lower level of interest rates compared with the previous year. The increase in interest income on monetary policy items was also reflected in the adjustment of monetary policy income (EUR 190 million) paid by the Bank of Finland to the Eurosystem. The bulk of this consisted of interest income on commercial banks' central bank deposits.
The Bank of Finland's operating expenses and provisions are covered by its income. Operating expenses net of banknote procurement amounted to EUR 91 million (2015: EUR 88 million). Operating expenses and other income also includes the Financial Supervisory Authority's (FIN-FSA) expenses and supervision fee income. Staff costs included in operating expenses totalled EUR 48 million, of which the Bank's share was EUR 32.4 million (2015: 32.8 million) and FIN-FSA's share was EUR 16.0 million (2015: 16.6 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 is 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 relating to the undertaking of the Bank's tasks. As in the previous year, and on the basis of these considerations, a share of the profit exceeding the statutory 50% will be made available to the State.
The Bank of Finland's financial statements and related notes have been published today on 30 March 2017.
For further information, please contact: Ms Marja Nykänen, Member of the Board of the Bank of Finland, tel. +358 10 831 2007.