The Bank of Finland’s audited profit for the financial year 2023 totals EUR 0.00 after a reduction of EUR 1,112 million was made in the general provision in order to cover a negative operating profit. The Bank of Finland’s financial result and the structure of its balance sheet are a reflection of the monetary policy measures taken to maintain price stability in accordance with the Bank’s mandate.

The European Central Bank (ECB) started raising interest rates in 2022 to reduce the excessively high rate of inflation, and in 2023 it continued to raise rates. The ECB’s deposit facility rate reached a level of 4.0% in 2023, after having started the year at 2.0%.

The Bank of Finland holds bonds acquired in asset purchase programmes, and a considerable proportion of these have been issued by Finland’s public sector. These are long-term and fixed-rate. The purchasing of these bonds created liquidity, and this then led to an increase in deposits by commercial banks with the central bank. In 2023, the interest paid on these deposits was an average of 3.3%. The differences in the extent to which the Bank of Finland’s assets and liabilities are subject to fixed or variable interest rates, in particular, poses a structural interest rate risk for its balance sheet, and this risk has materialised as interest rates have risen.

As a consequence of the higher interest rates, the amount of interest paid on the deposits of commercial banks during the financial year 2023 was EUR 4,472 million, which exceeds the Bank’s income from assets. Net interest income in 2023 was EUR -1,044 million, which was EUR 1,503 million less than in 2022.

The figure for central banking profit was EUR -1,027 million in 2023 (2022: EUR 35 million), and includes both interest income on the Bank of Finland’s financial assets and the Bank’s share of net interest income from the Eurosystem’s monetary policy operations. The operating expenses and income of the Bank of Finland and the Financial Supervisory Authority (FIN-FSA), excluding banknote production services and the pension fund contribution, amounted to EUR -70 million (2022: EUR -66 million).