Financial Statements
Notes on the profit and loss account
1. Interest income
Interest income generated in and outside the euro area totalled EUR 1,124.7 million. Of this, EUR 182.8 million consisted of foreign currency-denominated interest income and EUR 941.9 million of interest income denominated in euro.
The Governing Council started to raise the key ECB interest rates on 27 July 2022. At that time, the deposit facility rate was raised to 0%, and the period of many years when interest was charged on central bank deposits came to an end. Until then, national central banks (NCBs) had earned negative interest on minimum reserve deposits in excess of the minimum reserve requirements. Since 14 September 2022, NCBs have incurred interest expense on overnight deposits and minimum reserve deposits. Until 20 December 2022, minimum reserve deposits were remunerated at the interest rate on the main refinancing operations, but on 21 December 2022 the remuneration was changed and set at the deposit facility rate.Decision of the Governing Council of 27 October 2022.
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. In 2022, these items generated interest income from 27 July onwards.
| Foreign currency-denominated interest income received outside the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Interest income from coupon bonds | 69.2 | 55.2 | 14.0 |
| Income from discount papers | 1.8 | 0.3 | 1.5 |
| Interest income from deposits | 0.3 | 0.0 | 0.3 |
| Dividends from fund investments | 27.4 | 25.7 | 1.7 |
| Other interest income | 74.2 | 1.9 | 72.2 |
| Total | 173.0 | 83.2 | 89.8 |
| Euro-denominated interest income received outside the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Interest income from coupon bonds | – | – | – |
| Interest income from deposits | 0.2 | 0.2 | -0.0 |
| Other interest income | 13.0 | 20.3 | -7.2 |
| Total | 13.2 | 20.5 | -7.3 |
| Foreign currency-denominated interest income received from the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Interest income from coupon bonds | 3.1 | 3.1 | 0.1 |
| Interest income from deposits | 0.2 | 0.0 | 0.1 |
| Other interest income | 6.5 | – | 6.5 |
| Total | 9.8 | 3.1 | 6.7 |
| Euro-denominated interest income received from the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Interest income from coupon bonds | – | – | – |
| Income from discount papers | – | 0.1 | -0.1 |
| Interest income from deposits | 0.1 | 0.0 | 0.1 |
| Dividends on euro-denominated investments | 4.1 | 3.9 | 0.1 |
| ESCB items | 334.4 | – | 334.4 |
| Interest income from monetary policy lending | 0.4 | – | 0.4 |
| Interest income from monetary policy securities | 305.2 | 200.6 | 104.5 |
| Interest income from negative interest rates on credit institutions' deposits | 262.8 | 633.4 | -370.7 |
| Other interest income | 21.8 | 36.4 | -14.6 |
| Total | 928.7 | 874.6 | 54.1 |
| Total interest income (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Foreign currency-denominated interest income received outside the euro area | 173.0 | 83.2 | 89.8 |
| Euro-denominated interest income received outside the euro area | 13.2 | 20.5 | -7.3 |
| Foreign currency-denominated interest income received from the euro area | 9.8 | 3.1 | 6.7 |
| Euro-denominated interest income received from the euro area | 928.7 | 874.6 | 54.1 |
| Total | 1,124.7 | 981.3 | 143.3 |
2. Interest expense
| Foreign currency-denominated interest expense paid outside the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Other interest expense | -53.9 | -1.4 | -52.5 |
| Total | -53.9 | -1.4 | -52.5 |
| Euro-denominated interest expense paid outside the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Other interest expense | -23.1 | – | -23.1 |
| Total | -23.1 | – | -23.1 |
| Foreign currency-denominated interest expense paid in the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Other interest expense | -0.0 | – | -0.0 |
| Total | -0.0 | – | -0.0 |
| Euro-denominated interest expense paid in the euro area (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Interest expense on monetary policy deposits | -403.5 | – | -403.5 |
| Interest expense on monetary policy lending | -167.3 | -321.8 | 154.5 |
| Other interest expense | -18.0 | – | -18.0 |
| Total | -588.8 | -321.8 | -267.0 |
| Total interest expense (EUR m) | 2022 | 2021 | Change |
|---|---|---|---|
| Foreign currency-denominated interest expense paid outside the euro area | -53.9 | -1.4 | -52.5 |
| Euro-denominated interest expense paid outside the euro area | -23.1 | – | -23.1 |
| Foreign currency-denominated interest expense paid in the euro area | -0.0 | – | -0.0 |
| Euro-denominated interest expense paid in the euro area | -588.8 | -321.8 | -267.0 |
| Total | -665.8 | -323.2 | -342.6 |
3. Net interest income
| Net interest income (EUR m) | 31 Dec 2022 | 31 Dec 2021 | Change |
|---|---|---|---|
| Interest income | |||
| Financial assets | 222.0 | 147.2 | 74.8 |
| Monetary policy items | 568.3 | 834.1 | -265.8 |
| ESCB claims | 334.4 | – | 334.4 |
| Total | 1,124.7 | 981.3 | 143.3 |
| Interest expense | |||
| Financial assets | -95.0 | -1.4 | -93.6 |
| Monetary policy items | -570.8 | -321.8 | -249.0 |
| ESCB liabilities | – | – | – |
| Total | -665.8 | -323.2 | -342.6 |
| NET INTEREST INCOME | 458.9 | 658.1 | -199.2 |
4. Foreign exchange rate differences
This item consists of realised exchange rate gains and losses arising from the sale of currency positions. In 2022, gains related to exchange rate movements amounted to EUR 59.4 million.
5. Securities price differences
This item consists of realised gains and losses arising from the sale of securities. In 2022, realised gains from the sale of securities amounted to EUR 18.9 million.
6. Valuation losses related to currencies and securities
This item consists of valuation losses related to currencies and securities. Securities and currencies are treated on a security-by-security and currency-by-currency basis. The market value of securities decreased as a result of the increase in the corresponding yields in 2022. This resulted in unrealised price losses on US dollar-denominated securities, in particular, but also on other foreign currency-denominated securities. At the year-end, valuation losses related to securities totalled EUR 244.0 million. There were no valuation losses related to currencies in 2022.
7. Change in foreign exchange rate and price difference provision
Owing to realised net losses arising from foreign exchange rate and price differences, totalling EUR 164.7 million, the foreign exchange rate and price difference provision was adjusted downward by an equal amount in accordance with the accounting policies. All provisions are specified in the notes on the balance sheet under liabilities.
8. Income and expenses on fees and commissions
The item consists of fees and commissions related to investment activities.
9. Net result of pooling of monetary income
| Monetary income (EUR m) | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Net monetary income pooled by the Bank of Finland | 546.8 | 507.5 |
| Net monetary income allocated to the Bank of Finland | 131.1 | 21.5 |
| Monetary income reallocation for the year | -415.8 | -486.0 |
| Corrections to monetary income reallocation of previous years | -6.3 | 2.8 |
| Share of provision against counterparty risks | – | – |
| Total | -422.1 | -483.1 |
This item contains the net result of pooling of monetary income for 2022, amounting to an expense of EUR 415.8 million in comparison to an expense of EUR 486.0 million in the previous year.
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. Any interest paid on liabilities included within the liability base is to be deducted from the monetary income to be pooled. 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 table below specifies the items that comprise the earmarkable assets and the liability base as well as the applicable remuneration rates.
| Earmarkable assets | Remuneration rate | Liability base | Remuneration rate |
|---|---|---|---|
| Amount of gold holdings in proportion to each NCB's capital key share | 0% | Banknotes in circulation | Not applicable |
| Claims equivalent to the transfer of foreign reserves to the ECB (except gold) | Main refinancing operations rate | Liabilities to euro area credit institutions related to monetary policy operations denominated in euro | Rate of return |
| Lending to euro area credit institutions related to monetary policy operations denominated in euro | Rate of return | Net liabilities arising from balances of TARGET accounts* | Main refinancing operations rate |
| CBPP, CBPP2, PSPP - government/agency bonds and PEPP - government securities | Main refinancing operations rate | ||
| SMP, CBPP3, PSPP - Supra, CSPP and PEPP (excluding PEPP - government securities) | Rate of return | ||
| Claims on non-Eurosystem central banks that relate to liquidity-providing operations | Actual interest income (including accruals) | ||
| Accrued coupon interest related balances on impaired securities held for monetary policy purposes and for which full income/risk sharing applies | Not applicable | ||
| Net claims related to the allocation of euro banknotes within the Eurosystem* | Main refinancing operations rate | ||
| Accrued interest relating to regular monetary policy operations with a maturity of over 1 year | Not applicable | ||
| * Depending on the NCB these components maybe presented on the earmarkable asset side or liability base | |||
The monetary income pooled by the Eurosystem is 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 546.8 million and reallocated to the Bank of Finland amounting to EUR 131.1 million is the net result arising from the calculation of monetary income.
10. Share in ECB profit
The ECB distributed EUR 41.7 million profit for the financial year 2021, of which the Bank of Finland’s share recorded for the financial year 2022 totalled EUR 0.8 million.
11. Income from other equity shares and participating interests
The item consists of dividends received on shares in the BIS, EUR 3.7 million.
12. Other income
This item consists of income of the Financial Supervisory Authority (FIN-FSA), EUR 38.7 million. The item also includes income from real estate, EUR 5.3 million, and commissions and fees.
13. Staff costs
| Staff costs (EUR m) | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Salaries and fees | 50.3 | 49.6 |
| Employer's contributions to the pension fund | 9.8 | 9.4 |
| Other staff-related costs | 2.3 | 2.1 |
| Total | 62.3 | 61.1 |
| Average staff size | 2022Number of staff | 2021Number of staff |
|---|---|---|
| Bank of Finland | 373 | 368 |
| Financial Supervisory Authority | 246 | 239 |
| Total | 619 | 607 |
| Basic salaries paid to the members of the Board (EUR) | 2022 |
|---|---|
| Olli Rehn | 284,802 |
| Marja Nykänen | 258,644 |
| Tuomas Välimäki | 209,705 |
| Total | 753,151 |
Fringe benefits (meal benefits, company-paid telephone and company car) paid to the members of the Board totalled EUR 43,275.17.
Pension provision for the Bank of Finland’s employees is governed by the Public Sector Pensions Act (81/2016). A former board member may be paid compensation for income loss if the person may not, due to the provisions on the waiting period, 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.
14. 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 2022 to cover the pension fund’s deficit for the financial year.
15. Administrative expenses
| Administrative expenses (EUR m) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Supplies and purchases | 0.4 | 0.5 |
| Machinery and equipment | 7.5 | 7.4 |
| Real estate | 9.7 | 8.9 |
| Staff-related expenses | 2.4 | 1.0 |
| Purchase of services | 15.6 | 15.1 |
| Other | 2.4 | 2.3 |
| Total | 38.0 | 35.2 |
This item consists of rents, meeting and interest group-related costs, expenses arising from the purchase of services and cost of equipment. Expenses arising from training, travel and recruitment of staff are also recorded under this item.
16. Depreciation of fixed assets
| Depreciation of tangible fixed assets (EUR m) | 31 Dec 2022 | 31 Dec 2022 |
|---|---|---|
| Buildings | 3.8 | 3.7 |
| Machinery and equipment | 2.7 | 2.6 |
| Total | 6.5 | 6.2 |
| Depreciation of intangible fixed assets (EUR m) | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| IT systems | 3.2 | 2.8 |
| Total | 3.2 | 2.8 |
17. Banknote production services
Costs related to banknote production services totalled EUR 6.0 million.
18. Other expenses
The majority of other expenses relate to collection costs, exchange rate and rounding differences and other similar costs.
19. Income of the pension fund
This item consists of the Bank of Finland’s and the FIN-FSA’s employer contributions and employees’ share of premium income, totalling EUR 13.6 million, and the contribution of EUR 10 million paid by the Bank to the pension fund. The item also includes interest income on the pension fund’s investment activities, EUR 3.3 million, and income on the fund’s real estate, EUR 1.7 million.
20. Expenses of the pension fund
This item consists of pensions paid, EUR 29.2 million, the pension fund’s management costs and depreciation of the fund’s fixed assets.
21. Changes in provisions
This item consists of a reduction of the general provision, EUR 47 million. All provisions are specified in the notes on the balance sheet under liabilities.
22. Profit for the year
Profit for the financial year 2022 totalled EUR 0.00.