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ECB’s net profit for 2014: €989 million (2013: €1,440 million)
Net interest income from the Securities Markets Programme: €728 million (2013: €962 million)
Interest income on banknotes: €126 million (2013: €406 million)
Size of the ECB’s balance sheet: €185 billion (2013: €174 billion)
The Governing Council decided to transfer as at 31 December 2014 an amount of €15 million (2013: €0.4 million) to the risk provision, which increased it to the level of its ceiling of €7,575 million as at that date. The purpose of the risk provision is to cover foreign exchange rate, interest rate, credit and gold price risks, which are monitored on an ongoing basis. The size of this provision is reviewed annually. As a result of the transfer to the risk provision, the ECB’s net profit for 2014 was €989 million (2013: €1,440 million). The decrease was mainly due to (a) the lower interest income on banknotes as a result of the lower average rate on the main refinancing operations; (b) a decrease in the net interest income from the Securities Markets Programme (SMP) owing to redemptions; and (c) the higher operating expenses, primarily owing to costs associated with the establishment of the Single Supervisory Mechanism (SSM).
The Governing Council decided to make an interim profit distribution, amounting to €841 million, to the euro area national central banks (NCBs) on 30 January 2015. At yesterday’s meeting the Governing Council decided to distribute the remainder of the profit, amounting to €148 million, to the euro area NCBs on 20 February 2015.
The ECB’s income derives mainly from investment earnings on its foreign reserves portfolio and own funds portfolio, from interest income on its 8% share of the total euro banknotes in circulation and, in recent years, from net interest income arising from securities purchased for monetary policy purposes.
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The consolidated balance sheet of the Eurosystem amounted to €2,208 billion at the end of 2014, compared with €2,273 billion in 2013. Total liabilities decreased, mainly owing to the suspension of the weekly fine-tuning operation sterilising the liquidity injected under the SMP, which resulted in a reduction in “fixed-term deposits”. Total assets decreased, mainly owing to early repayments by counterparties of the amounts allotted to them under the two three-year longer-term refinancing operations.
The Eurosystem’s holdings of securities held for monetary policy purposes decreased by €19 billion to €217 billion (2013: €236 billion). Securities held under the SMP declined by €34.5 billion owing to redemptions. This reduction was partially offset by securities purchased under the third covered bond purchase programme and the ABSPP which commenced in late 2014 and amounted to €31.3 billion at the year-end.