The Parliamentary Supervisory Council has confirmed the Bank of Finland’s financial statements for 2017. Upon the proposal of the Board of the Bank of Finland, the Parliamentary Supervisory Council decided that EUR 104 million be transferred to the State. Last year, the Bank transferred EUR 91 million to the State. In total, EUR 1.7 billion has been transferred to the State since the beginning of 2008.
The Bank of Finland’s profit after provisions totalled EUR 156 million (2016: EUR 131 million). The Bank increased its general provision and provision against real value loss by EUR 102 million (2016: EUR 101 million). These provisions serve as a buffer against, for example, exchange rate, interest rate and credit risks. In addition, the Bank established a provision of EUR 1.2 million against losses in monetary policy operations. Total provisions against risks amounted to EUR 4.0 billion (2016: EUR 3.9 billion).
‘Monetary policy asset purchase programmes have increased the Bank of Finland’s balance sheet and exposures. 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 on the Eurosystem’s monetary policy items as well as investment income on foreign reserves and other financial assets of the Bank. In 2017, net interest income amounted to EUR 567 million (2016: EUR 469 million).
The monetary policy asset purchase programmes continued. As a result, the increase in net interest income was primarily due to a growth in deposits placed by commercial banks with the Bank of Finland for monetary policy purposes. These deposits are subject to a negative interest rate payable by banks. Higher interest income increased the monetary income adjustment, EUR 264 million, paid by the Bank of Finland to the Eurosystem. Foreign currency-denominated interest income increased interest income on financial assets, whereas euro-denominated interest income decreased further.
The Bank of Finland’s operating expenses and provisions are covered by its income. Operating expenses net of banknote procurement amounted to EUR 90 million (2016: EUR 91 million). Operating expenses and other income also include the Financial Supervisory Authority’s (FIN-FSA) expenses and supervision fee income. Staff costs included in operating expenses totalled EUR 47 million, of which the Bank’s share was EUR 31.5 million (2016: EUR 32.4 million) and the FIN-FSA’s share was EUR 15.5 million (2016: EUR 16.0 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 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 tasks. As in the previous year, and on the basis of these considerations, a share of the profit for 2017 exceeding the statutory 50% will be made available for the State.
The Bank of Finland’s financial statements and related notes have been published today on 27 March 2018 as part of the Bank’s Annual Report.
For further information, please contact Marja Nykänen, Member of the Board of the Bank of Finland, tel. +358 9 183 2007.