Friday, February 26

ECB profit falls 30.5% in 2020


ECB headquarters in Frankfurt.

ECB headquarters in Frankfurt.
Shutterstock

The European Central Bank (ECB) obtained a profit of 1,643 million euros in 2020, 30.5% less than in 2019 (2,366 million euros), and it was distributed in full to the national central banks of the euro area.

The ECB reported this Thursday that the result “was primarily due to a decrease in net income for interest obtained from foreign reserve assets and securities held for monetary policy purposes “.

Likewise, 48 million euros were transferred to the provision for financial risks of the ECB, which reduced profit.

The ECB’s profit is distributed to the national central banks of the eurozone.

The Governing Council decided to make a provisional distribution of profits, amounting to 1,260 million euros, to national central banks January 29.

At its meeting yesterday, the Governing Council decided to distribute the remaining benefits, amounting to 383 million euros, on February 19.

The ECB’s balance sheet rose to 569,000 euros (457,000 million euros in 2019) for the bonds acquired to face the crisis due to the covid-19 pandemic and the debt acquired through another previous program.

At the end of 2020, the consolidated balance sheet of the Eurosystem, which includes the assets and liabilities of the central banks of the euro area countries and the ECB vis-à-vis third parties, stood at € 6.979 trillion, compared to € 4.671 trillion in 2019.

The increase was mainly due to the third series of long-term financing operations and debt purchases.

Bond holdings they stood at 3,695 billion euros after increasing by 1,063 billion euros (2,632 billion a year earlier).

Debt purchases for the pandemic they represented 754,000 million euros and the bonds of the previous debt purchase program, 2,909 billion euros.

Net interest income fell to 2,017 million euros in 2020 (2,686 million in 2019).

Net interest income generated by the bonds purchased fell to 1.3 billion euros, 7.1% less than the 1,400 million euros of the previous year, due to amortizations.

Net interest income from reserve assets in foreign currency decreased to 474 million euros (1,052 million in 2019), due to the decrease in interest income on the portfolio in US dollars.

Profits from financial operations increased to 342 million euros, compared to 197 million in 2019, for “an increase in earnings from sales price of securities denominated in US dollars, given that the decline in the yields of bonds in dollars during 2020 had a positive impact on their market value,” according to the ECB.

Personnel expenses increased to 646 million euros (566 million in 2019) as a result of the increase in the average number of employees in 2020, mainly in banking supervision, as well as the increase in post-employment benefits derived from the actuarial valuation carried out at the end of 2020.

Other administration expenses fell to € 553 million (€ 590 million in 2019) due to lower expenses related to external consulting support services and business travel.

Supervision fee income, derived from fees charged to recover the expenses incurred by the ECB in the exercise of its supervisory functions, amounted to € 535 million (€ 537 million a year earlier).

The slight decrease in 2020 This was mainly due to the decrease in administrative expenses related to supervisory functions, which offset the increase in personnel costs derived from the increase in the average number of employees in banking supervision.

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