1. Interest income

Interest income from and outside the euro area totalled EUR 796.7 million. Of this, EUR 144.7 million consisted of foreign currency-denominated interest income and EUR 652.0 million of euro-denominated interest income.

The interest rate on overnight deposits was negative throughout the year, which means that interest has been charged on central bank deposits. This negative interest accrues on both overnight deposits and minimum reserve deposits in excess of the minimum reserve requirements.

ESCB items – claims equivalent to the transfer of foreign reserves to the ECB, claims and liabilities relating to the ECB’s share of euro banknotes and to the application and adjustment of the ECB capital key, as well as TARGET2 balances – are remunerated at the interest rate on the main refinancing operations (MRO). Since the MRO rate was 0% throughout 2019, no interest income was earned from ESCB items.

Foreign currency-denominated interest income received outside the euro area (EUR m) 2019 2018 Change
Non-euro area coupon bonds 114.2 89.3 24.9
Non-euro area discount papers 0.2 0.7 -0.5
Non-euro area deposits 2.2 1.8 0.4
Other 19.9 16.1 3.8
Total 136.5 107.9 28.7
Euro-denominated interest income received outside the euro area (EUR m) 2019 2018 Change
Non-euro area coupon bonds 0.5 0.8 -0.3
Non-euro area deposits 0.0 0.5 -0.5
Other 7.4 8.3 -0.9
Total 7.9 9.6 -1.7
Foreign currency-denominated interest income received from the euro area (EUR m) 2019 2018 Change
Euro area coupon bonds 7.8 9.6 -1.8
Euro area deposits 0.3 0.1 0.2
Total 8.1 9.7 -1.6
Euro-denominated interest income received from the euro area (EUR m) 2019 2018 Change
Euro area coupon bonds -1.9 -2.9 1.0
Euro area discount papers -0.4 -3.7 3.3
Euro area deposits 0.0 0.7 -0.6
Dividends on euro-denominated investments 21.8 15.2 6.6
ESCB items – – –
Interest income from monetary policy lending – – –
Interest income from monetary policy securities 226.1 200.9 25.1
Interest income from negative interest rates on credit institutions' deposits 387.5 380.0 7.5
Other 11.1 6.5 4.6
Total 644.1 596.6 47.6
Total interest income (EUR m) 2019 2018 Change
Foreign currency-denominated interest income received outside the euro area 136.5 107.9 28.7
Euro-denominated interest income received outside the euro area 7.9 9.5 -1.7
Foreign currency-denominated interest income received from the euro area 8.1 9.7 -1.6
Euro-denominated interest income received from the euro area 644.1 596.6 47.6
Total 796.7 723.7 73.0

2. Interest expenses

Foreign currency-denominated interest expenses paid outside the euro area (EUR m) 2019 2018 Change
Non-euro area deposits -0.2 -0.0 -0.2
Other -15.6 -13.4 -2.2
Total -15.8 -13.4 -2.4
Euro-denominated interest expenses paid outside the euro area (EUR m) 2019 2018 Change
Non-euro area deposits -0.0 -0.4 0.4
Other -0.0 -0.3 0.3
Total -0.0 -0.7 0.7
Euro-denominated interest expenses paid in the euro area (EUR m) 2019 2018 Change
Monetary policy lending -24.9 -11.6 -13.2
Other -0.7 -1.3 0.6
Total -25.6 -13.0 -12.6
Total interest expenses (EUR m) 2019 2018 Change
Foreign currency-denominated interest expenses paid outside the euro area -15.8 -13.4 -2.4
Euro-denominated interest expenses paid outside the euro area -0.0 -0.7 0.7
Euro-denominated interest expenses paid in the euro area -25.6 -13.0 -12.6
Total -41.4 -27.0 -14.4

3. Net interest income

Net interest income (EUR m) 31 Dec 2019 31 Dec 2018 Change
Interest income
Financial assets 183.1 142.8 40.3
Monetary policy items 613.6 580.9 32.7
ESCB claims – – –
Total 796.7 723.7 73.0
Interest expenses
Financial assets -16.5 -15.4 -1.1
Monetary policy items -24.9 -11.6 -13.2
ESCB liabilities – – –
Total -41.4 -27.0 -14.4
NET INTEREST INCOME 755.3 696.7 58.6

4. Foreign exchange rate differences

This item includes realised exchange rate gains and losses arising from the sale of currency positions. In 2019, gains related to exchange rate movements amounted to EUR 2.6 million.

5. Securities price differences

This item includes realised gains and losses arising from the sale of securities. In 2019, realised gains from the sale of securities amounted to EUR 26.2 million, of which EUR 1.9 million related to the sale of securities in the CSPP portfolio due to corporate actions.

6. Valuation losses related to currencies and securities

This item consists of valuation losses related to currencies and securities. Each security type and currency is treated separately. There were no valuation losses related to currencies in 2019. Valuation losses related to securities amounted to EUR 3.2 million.

7. Change in foreign exchange rate and price difference provision

Realised net gains arising from foreign exchange rate and price differences, totalling EUR 23.8 million, were used to increase the foreign exchange rate and price difference provision in accordance with the accounting conventions. All provisions have been specified in the notes on the balance sheet under liabilities.

8. Income and expenses on fees and commissions

The item includes fees and commissions related to investment activities.

9. Net result of pooling of monetary income

Monetary income 31 Dec 2019 31 Dec 2018
EUR m EUR m
Net monetary income pooled by the Bank of Finland 513.4 450.9
Net monetary income allocated to the Bank of Finland 206.3 217.9
Net monetary income according to the capital allocation key -307.1 -233.0
Corrections to monetary income reallocation of previous years 14.2 -9.0
Total -292.9 -242.1

The amount of each Eurosystem NCB’s monetary income is determined by measuring the annual income that derives from the earmarkable assets held against its liability base. The liability base consists mainly of the following items: banknotes in circulation; liabilities to euro area credit institutions related to monetary policy operations denominated in euro; intra-Eurosystem liabilities of the NCBs arising from the issuance of ECB debt certificates; net intra-Eurosystem liabilities resulting from TARGET2 transactions; net intra-Eurosystem liabilities related to the allocation of euro banknotes within the Eurosystem; accrued interest recorded at quarter-end by each NCB on monetary policy liabilities the maturity of which is one year or longer; liabilities vis-à-vis the ECB backing the claim in relation to swap agreements that earn net income for the Eurosystem. Any interest paid on liabilities included within the liability base is to be deducted from the monetary income to be pooled.

The earmarkable assets consist mainly of the following items: lending to euro area credit institutions related to monetary policy operations denominated in euro; securities held for monetary policy purposes; intra-Eurosystem claims equivalent to the transfer of foreign reserve assets to the ECB; net intra-Eurosystem claims resulting from TARGET2 transactions; net intra-Eurosystem claims related to the allocation of euro banknotes within the Eurosystem; claims on euro area counterparties related to swap agreements between the ECB and non-Eurosystem central banks that earn net income for the Eurosystem; accrued interest recorded at quarter-end by each NCB on monetary policy assets the maturity of which is one year or longer; a limited amount of each NCBs’ gold holdings in proportion to each NCB’s capital key share.

The amount of each NCB’s monetary income shall be determined by measuring the actual income that derives from the earmarkable assets recorded in its books. As an exception to this, gold is considered to generate no income and the following are considered to generate income at the latest available marginal interest rate used by the Eurosystem in its tenders for main refinancing operations: (i) securities held for monetary policy purposes under Decision ECB/2009/16 of 2 July 2009 on the implementation of the covered bond purchase programme, (ii) securities held for monetary policy purposes under Decision ECB/2011/17 of 3 November 2011 on the implementation of the second covered bond purchase programme and (iii) debt instruments issued by central, regional and local governments and recognised agencies and substitute debt instruments issued by public non-financial corporations under Decision ECB/2015/10 of 4 March 2015 on the implementation of a secondary markets public sector asset purchase programme. Where the value of a NCB’s earmarkable assets exceeds or falls short of the value of its liability base, the difference shall be offset by applying to the value of the difference the latest available marginal rate for the Eurosystem’s main refinancing operations.

The monetary income pooled by the Eurosystem is to be allocated among NCBs according to the subscribed ECB capital key. The difference between the monetary income pooled by the Bank of Finland amounting to EUR 513.4 million and reallocated to the Bank of Finland amounting to EUR 206.3 million is the net result arising from the calculation of monetary income.

10. Provision against losses in monetary policy operations

This item contains the Bank of Finland’s share in 2019 of the net result of the provision against credit risks in monetary policy operations of the Eurosystem, amounting to an income of EUR 1.3 million (see ʻProvisions’ in the notes on the balance sheet).

11. Share in ECB profit

The ECB distributed EUR 384 million profit for the financial year 2018, of which the Bank of Finland’s share recorded for the financial year 2019 totalled EUR 6.9 million.

12. Income from other equity shares and participating interests

This item includes the Bank of Finland’s share, EUR 26.1 million, in income on the SMP- and APP-related portfolios distributed by the ECB in the form of interim profit distribution for the financial year 2019. The item also includes dividends received on shares in the BIS, EUR 3.2 million.

13. Other income

This item consists of the Financial Supervisory Authority’s supervision and processing fees, EUR 33.3 million. The item also includes income from real estate, EUR 5.6 million, capital gains from the sale of a real estate corporation, EUR 2.2 million and commissions and fees.

14. Staff costs

Staff costs 31 Dec 2019 31 Dec 2018
EUR m EUR m
Salaries and fees 43.9 39.4
Employer's contributions to the pension fund 8.5 7.6
Other staff-related costs 1.5 1.0
Total 53.9 48.0
Average staff size 2019 2018
Number of staff Number of staff
Bank of Finland 362 356
Financial Supervisory Authority 226 194
Total 588 550
Basic salaries paid to the members of the Board (EUR) 2019
Olli Rehn 271,293
Marja Nykänen 244,527
Tuomas Välimäki 199,749
Total 715,569

Fringe benefits (meal benefits, company-paid telephone and company car) paid to the members of the Board totalled EUR 28,668.

Pension benefits of the members of the Board are determined according to the Bank of Finland’s Pension Rule, without special terms and under same terms and conditions as confirmed in the Rule for other personnel. As applicable, the Bank of Finland’s Pension Rule is in line with the Public Sector Pension Act. A former board member may be paid compensation for income loss if the person may not, because of qualifying period provisions, accept employment from elsewhere or if the pension from the Bank of Finland is less than the compensation for income loss. Full compensation for income loss amounts to 60% of salary and is paid for one year, adjusted with the pension paid by the Bank, so that the sum of full compensation and pension does not exceed 60% of salary.

15. Pension fund contribution

Approved by the Parliamentary Supervisory Council, the Bank of Finland paid a contribution of EUR 10 million to the Bank’s pension fund in 2019 to cover the pension fund’s deficit for the financial year.

16. Administrative expenses

Administrative expenses 2019 2018
EUR m EUR m
Supplies and purchases 0.5 0.5
Machinery and equipment 7.1 6.8
Real estate 8.9 9.5
Staff-related expenses 4.0 3.6
Purchase of services 12.8 12.6
Other 2.1 4.6
Total 35.4 37.6

This item includes rents, meetings and interest group-related costs, expenses arising from the purchase of services and cost of equipment. Expenses involved in training, travel and recruitment of staff are also recorded under this item.

17. Depreciation of fixed assets

Depreciation of tangible fixed assets 31 Dec 2019 31 Dec 2018
EUR m EUR m
Buildings 3.4 4.4
Machinery and equipment 2.7 3.0
Total 6.1 7.4
Depreciation of intangible fixed assets 31 Dec 2019 31 Dec 2018
EUR m EUR m
IT systems 3.2 4.3
Total 3.2 4.3

18. Banknote production services

Costs related to banknote production services totalled EUR 5.7 million.

19. Other expenses

The bulk of other expenses is related to the use and maintenance of property.

20. Income of the pension fund

This item includes the Bank of Finland’s and Financial Supervisory Authority’s employer contributions and employee’s share of premium income, EUR 11.7 million, as well as a contribution of EUR 10 million paid by the Bank to the pension fund. Income from the pension fund’s real estate, EUR 1.7 million, is also recorded under this item.

21. Expenses of the pension fund

This item includes pensions paid, EUR 28.4 million, the Bank of Finland pension fund’s management costs and depreciation of the pension fund’s fixed assets.

22. Changes in provisions

This item includes the increase of the provision against real value loss, EUR 55 million, and the increase of the general provision, EUR 50 million. All provisions have been specified in the notes on the balance sheet under liabilities.

23. Profit for the financial year

The profit for the financial year 2019 totalled EUR 319.8 million. The Board proposes to the Parliamentary Supervisory Council that EUR 188.0 million of the profit be made available for the needs of the State.

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