Financial statements
Notes on the profit and loss account
The Governing Council of the ECB started raising the key ECB interest rates on 27 July 2022, and the policy rate hikes continued in 2023. The key ECB interest rates were raised 6 times during the year. The interest rate on the main refinancing operations rose from 2.5% to 4.5%, and the average rate in these operations was 3.80753%. The deposit facility rate rose from 2.0% to 4.0%, and the average rate was 3.30753%. Consequent to the policy rate hikes, the interest income of the Bank of Finland increased, but interest expense increased even more, resulting to a negative net interest income for the Bank of Finland in 2023.
1. Interest income
Interest income generated in and outside the euro area totalled EUR 3,880.1 million. Of this, EUR 447.0 million consisted of interest income denominated in foreign currency and EUR 3,433.0 million of interest income denominated in euro.
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 TARGET balances – are remunerated at the interest rate on the main refinancing operations. Interest income on these items amounted to EUR 2,392.0 million in 2023.
| Foreign currency-denominated interest income received outside the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Interest income from coupon bonds | 199.8 | 69.2 | 130.6 |
| Income from discount papers | 1.5 | 1.8 | -0.3 |
| Interest income from deposits | 0.8 | 0.3 | 0.4 |
| Dividends from fund investments | 28.7 | 27.4 | 1.2 |
| Interest income from IMF items | 197.9 | 63.2 | 134.7 |
| Other interest income | 10.1 | 11.0 | -0.9 |
| Total | 438.7 | 173.0 | 265.7 |
| Euro-denominated interest income received outside the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Interest income from deposits | – | 0.2 | -0.2 |
| Interest income from negative interst rates on non-monetary policy deposits | – | 13.0 | -13.0 |
| Other interest income | – | 0.0 | -0.0 |
| Total | – | 13.2 | -13.2 |
| Foreign currency-denominated interest income received from the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Interest income from coupon bonds | 5.0 | 3.1 | 1.9 |
| Interest income from deposits | 0.8 | 0.2 | 0.6 |
| Other interest income | 2.5 | 6.5 | -4.0 |
| Total | 8.3 | 9.8 | -1.5 |
| Euro-denominated interest income received from the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Interest income from deposits | – | 0.1 | -0.1 |
| Dividends from fund investments | 4.5 | 4.1 | 0.4 |
| Interest income from ESCB items | 2,392.0 | 334.4 | 2,057.6 |
| Interest income from monetary policy lending | 416.4 | 0.4 | 416.0 |
| Interest income from monetary policy securities | 618.1 | 305.2 | 312.9 |
| Interest income from negative interest rates on credit institutions' deposits | – | 262.8 | -262.8 |
| Interest income from negative interst rates on non-monetary policy deposits | – | 20.3 | -20.3 |
| Other interest income | 2.1 | 1.6 | 0.5 |
| Total | 3,433.0 | 928.7 | 2,504.3 |
| Total interest income (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Foreign currency-denominated interest income received outside the euro area | 438.7 | 173.0 | 265.7 |
| Euro-denominated interest income received outside the euro area | – | 13.2 | -13.2 |
| Foreign currency-denominated interest income received from the euro area | 8.3 | 9.8 | -1.5 |
| Euro-denominated interest income received from the euro area | 3,433.0 | 928.7 | 2,504.3 |
| Total | 3,880.1 | 1,124.7 | 2,755.4 |
2. Interest expense
Interest expense paid in and outside the euro area totalled EUR 4,924.0 million. The majority of this, EUR 4,472.2 million, consisted of an interest expense arising from the remuneration of commercial banks’ deposits with the Bank of Finland. Interest expense denominated in foreign currency amounted to EUR 179.4 million.
| Foreign currency-denominated interest expense paid outside the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Interest expense on IMF items | -164.1 | -53.8 | -110.3 |
| Other interest expense | -0.0 | -0.0 | -0.0 |
| Total | -164.1 | -53.9 | -110.3 |
| Euro-denominated interest expense paid outside the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Interest expense on deposits | -162.3 | -23.1 | -139.2 |
| Other interest expense | -4.4 | – | -4.4 |
| Total | -166.7 | -23.1 | -143.6 |
| Foreign currency-denominated interest expense paid in the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Other interest expense | -15.3 | -0.0 | -15.2 |
| Total | -15.3 | -0.0 | -15.2 |
| Euro-denominated interest expense paid in the euro area (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Interest expense on monetary policy deposits | -4,472.2 | -403.5 | -4,068.7 |
| Interest expense on monetary policy lending | – | -167.3 | 167.3 |
| Interest expense on liabilities to the ESCB | -0.9 | – | -0.9 |
| Interest expense on non-monetary policy deposits | -100.8 | -18.0 | -82.8 |
| Other interest expense | -4.0 | – | -4.0 |
| Total | -4,577.9 | -588.8 | -3,989.1 |
| Total interest expense (EUR million) | 2023 | 2022 | Change |
|---|---|---|---|
| Foreign currency-denominated interest expense paid outside the euro area | -164.1 | -53.9 | -110.3 |
| Euro-denominated interest expense paid outside the euro area | -166.7 | -23.1 | -143.6 |
| Foreign currency-denominated interest expense paid in the euro area | -15.3 | -0.0 | -15.2 |
| Euro-denominated interest expense paid in the euro area | -4,577.9 | -588.8 | -3,989.1 |
| Total | -4,924.0 | -665.8 | -4,258.3 |
3. Net interest income
| Net interest income (EUR million) | 31 Dec 2023 | 31 Dec 2022 | Change |
|---|---|---|---|
| Interest income | |||
| Financial assets | 453.6 | 188.7 | 264.9 |
| Non-monetary policy deposits | – | 33.3 | -33.3 |
| Monetary policy items | 1,034.5 | 568.3 | 466.2 |
| Claims on the ESCB | 2,392.0 | 334.4 | 2,057.6 |
| Total | 3,880.1 | 1,124.7 | 2,755.4 |
| Interest expense | |||
| Financial assets | -187.9 | -53.9 | -134.0 |
| Non-monetary policy deposits | -263.1 | -41.0 | -222.0 |
| Monetary policy items | -4,472.2 | -570.8 | -3,901.4 |
| Liabilities to the ESCB | -0.9 | – | -0.9 |
| Total | -4,924.0 | -665.8 | -4,258.3 |
| NET INTEREST INCOME | -1,044.0 | 458.9 | -1,502.9 |
4. Foreign exchange rate differences
This item consists of realised exchange rate gains and losses arising from the sale of currency positions. In 2023, gains related to exchange rate movements amounted to EUR 160.8 million.
5. Securities price differences
This item consists of realised gains and losses arising from the sale of securities. In 2023, realised gains from the sale of securities amounted to EUR 35.8 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 further as a result of the continued increase in the corresponding yields in 2023. This resulted in unrealised price losses, particularly on fund investments and US dollar-denominated securities. At the year-end, valuation losses related to securities totalled EUR 20.3 million. In 2023, the Japanese yen depreciated, resulting in a valuation loss of EUR 49.3 million in connection with foreign currency valuation.
7. Change in foreign exchange rate and price difference provision
Owing to realised net gains arising from foreign exchange rate and price differences, totalling EUR 140.0 million, the foreign exchange rate and price difference provision was adjusted upwards 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 million) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Net monetary income pooled by the Bank of Finland | 709.2 | 546.8 |
| Net monetary income allocated to the Bank of Finland | 742.7 | 131.1 |
| Monetary income reallocation for the year | 33.5 | -415.8 |
| Corrections to monetary income reallocation of previous years | -0.2 | -6.3 |
| Share of provision against credit risks in monetary policy operations | -0.8 | – |
| Total | 32.5 | -422.1 |
The item contains the net result of pooling of monetary income for 2023, amounting to an income of EUR 32.5 million in comparison to an expense of EUR 415.8 million in the previous year, together with the Bank of Finland’s share of the net result of the provisioning against credit risks in monetary policy operations of the Eurosystem amounting to an expense of EUR 0.8 million (see section 12 ‘Provisions’ in ‘Notes on the balance sheet’).
The amount of monetary income of each Eurosystem national central bank (NCB) 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 rate for the Eurosystem’s main refinancing operations.
The items comprising the earmarkable assets and the liability base, as well as the applicable remuneration rates, are presented in the Table below.
| 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 |
| 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 to 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 may be 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 709.2 million and reallocated to the Bank of Finland amounting to EUR 742.7 million is the net result arising from the calculation of monetary income.
10. Share in ECB profit
The ECB did not distribute any profit for the financial years 2022 and 2023.
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 42.8 million. The item also includes income from real estate, EUR 5.1 million, and commissions and fees.
13. Staff costs
| Staff costs (EUR million) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Salaries and fees | 51.3 | 50.3 |
| Employer's contributions to the pension fund | 10.1 | 9.8 |
| Other staff-related costs | 4.0 | 2.3 |
| Total | 65.4 | 62.3 |
| Average staff size | 2023Number of staff | 2022Number of staff |
|---|---|---|
| Bank of Finland | 373 | 373 |
| Financial Supervisory Authority | 243 | 246 |
| Total | 616 | 619 |
| Basic salaries paid to the members of the Board (EUR) | 2023 |
|---|---|
| Olli Rehn1 | 212,536 |
| Marja Nykänen | 265,088 |
| Tuomas Välimäki | 219,735 |
| Total | 697,359 |
| 1) On leave of absence from 23 September 2023 to 30 January 2024. |
Fringe benefits (meal benefits, company-paid telephone and company car) paid to the members of the Board totalled EUR 40,527.22.
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 board member 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 2023 due to an increase in the Bank’s pension liabilities.
15. Administrative expenses
| Administrative expenses (EUR million) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Supplies and purchases | 0.5 | 0.4 |
| Machinery and equipment | 8.4 | 7.5 |
| Real estate | 10.2 | 9.7 |
| Staff-related expenses | 3.3 | 2.4 |
| Purchase of services | 16.3 | 15.6 |
| Other | 3.2 | 2.4 |
| Total | 42.1 | 38.0 |
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 and intangible fixed assets (EUR million) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Buildings | 4.0 | 3.8 |
| Machinery and equipment | 2.9 | 2.7 |
| IT systems | 3.1 | 3.2 |
| Total | 10.1 | 9.7 |
17. Banknote production services
Costs related to banknote production services totalled EUR 4.4 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 14.1 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 21.4 million, and income on the fund’s real estate, EUR 1.8 million.
20. Expenses of the pension fund
This item consists of pensions paid, EUR 31.5 million, the pension fund’s management costs and depreciation of the fund’s fixed assets.
21. Changes in provisions
This item consists of a downward adjustment of the general provision, EUR 1,112.3 million. All provisions are specified in the notes on the balance sheet under liabilities.
22. Profit for the year
Profit for the financial year 2023 totalled EUR 0.00.