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ECB: profits decreased to 1.64 billion, but financial statements grow by over 20%

February 20, 2021


Abstract : The anti-COVID-19 measures made financial statements increase from 457 billion to 569 billion, while income recorded the lower interest margin. Meanwhile, profits from financial operations increase thanks to the drop of dollar-denominated bond yields.

MILAN, Feb. 19 (Class Editori) -- European Central Bank's profit decreased in the same year when its financial statements recorded an over 20% growth, from 457 billion euros to 569 billion euros, after the anti-COVID-19 measures that include the Pandemic Emergency Purchase Programme (PEPP) and the Asset Purchase Programme (APP). In particular, the Frankfurt-based bank's earnings decreased to 1.64 billion compared to the 2.37 billion worth recorded at the end of 2019: the amount, as usual, has been fully redistributed to national central banks. The fall has been mostly penalized by a lower interest margin that decreased from 2.686 billion in 2019 to 2.017 billion in 2020.

A sharp drop has also been recorded as concerns net interest income from foreign currency assets, that decreased from 1,052 billion in 2019 to 474 billion also due to the lower interest income on the US-dollar portfolio. On the other hand, the trend in the US market also benefited the European institution, as profits from financial operations rose to 342 million from 197 million in 2019. This increase was made possible by higher profits on sales of dollar-denominated securities, following the reduction in US dollar-denominated bond yields.

Total personnel costs also considerably increased to 646 million euros from 566 million euros in 2019 (+80 million euros): the growth was mainly due to the increase in the number of bank supervisory employees, while the pandemic led to a decrease in administrative expenses (from 590 million euros to 553 million euros).

At the end of 2020, the Eurosystem's consolidated balance sheet, including the assets and liabilities of Eurozone’s central banks and of the ECB regarding third parties, amounted to 6,979 billion euros, considerably growing from 4,671 billion at the end of 2019, again due to the impact of market operations, from the new long-term liquidity auctions (TLTRO III) to the PEPP and to the APP interventions. Securities held for monetary policy purposes reached 3,695 billion (up by 1,063 billion from 2019), while those linked to asset purchases rose to 2,909 billion. (All rights reserved)

(Source:Class Editori)

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Keyword: ECB

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