MNI: ECB 2024 Losses EUR7.9 Bn, Even As Balance Sheet Shrinks
MNI (LONDON) - European Central Bank losses totalled EUR7.9 billion in 2024, largely due to higher interest costs on liabilities accumulated during years of easy monetary policy.
The ECB made an operating loss of similar scale in 2023, but the overall loss was only EUR1.3 billion after a transfer from the risk provision fund. Carried losses on the balance sheet now total around EUR9 billion, to be repaid from future profits, before the risk provision fund is replenished.
In a release published on Thursday, the ECB reiterated its goal remains to maintain price stability and not to generate profits, with the current losses the direct result of necessary Eurosystem monetary policy actions fulfilling the prime mandate
Calendar year 2024 is likely to be the peak year for losses for the ECB, with lower interest rates and a smaller balance sheet helping reduce costs and ensure any shortfalls are substantially lower.
The ECB, which prior to 2022 had returned cumulative profits of EUR25.3 billion over two decades, said the overall balance sheet fell to EUR641 billion in 2024, down from EUR673 billion in 2023 and was likely to decline further this year. Net equity rose by EUR5.5 billion, largely on the bank of revaluations of both gold and dollar holdings.
Earlier this week, ECB Executive Board member Piero Cipollone discussed the central bank's balance sheet with MNI at a Connect livestreamed event. (See MNI BRIEF: ECB To Factor Balance Sheet Into Cuts - Cipollone)
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