Image: Arne Dedert (dpa)
After using 1.63 billion euros in financial risk provisions to cover losses, the bottom line for 2022 was black zero.
The central bank explains the losses on the one hand with rising interest payments. The background to this development is above all the rising key interest rates in the currency area. In addition, the ECB contingent write-downs of own assets and US dollar denominated assets. This is justified with the rising yields, ultimately the rising interest rates on the capital markets. As a result of this development, the prices of existing securities fall, which reduces their value.
The rising interest rates on the financial markets are mainly due to the fact that, in addition to the ECB many other central banks have also sharply raised their key interest rates in response to the high inflation. On the one hand, the rising interest rates lead to rising interest payments on the part of the central banks. On the other hand, the assets in the portfolio decrease in value in mathematical terms.
Decrease explained by long-term loans
The bottom line is that the interest income of the ECB to 900 million euros, after 1.566 billion euros in the previous year. The depreciation quantifies the ECB to 1.8 billion euros. Compared to the previous year, these have increased significantly, in 2021 they were only 133 million euros. Personnel costs fell slightly by EUR 22 million to EUR 652 million. At EUR 594 million, fee income from financial supervision was slightly more than in the previous year.
The balance sheet total of the entire Eurosystem, ie including the national central banks, which was inflated by securities purchases, fell from 8.564 trillion in the previous year to 7.956 trillion euros. The main explanation for the decline is that euro area commercial banks have repaid part of previously extended long-term loans (TLTROs) or some of these loans have expired. The ECB the loans were also extended during the corona pandemic to keep the flow of credit going during the crisis.
Warning of balance sheet losses
As early as 2021, the annual surplus of the euro central bank had shrunk significantly to 192 million euros. The ECB always distributes its annual profits in full to the national central banks of the euro countries. With Croatia joining the monetary union at the beginning of the year, 20 national central banks are now part of it.
The European central bank (ECB) and several national euro central banks had already warned of possible balance sheet losses. In 2022, the Swiss National Bank (SNB) suffered the largest loss in its 115-year history with a deficit of CHF 132 billion due to falling share and bond prices and the appreciation of the Swiss franc.
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