Bundesbank posts €4.6 billion profit in 2013
The Bundesbank posted a profit of €4.6 billion for the 2013 financial year, after recording a surplus of €664 million in 2012. This amount was transferred in full today to the Federal Government of Germany pursuant to section 27 number 2 of the Bundesbank Act (Bundesbankgesetz). "Despite interest income being lower, the Bundesbank has recorded a higher profit for 2013 than for 2012 as it has not been necessary to transfer any more funds to the risk provisions", explained Bundesbank President Jens Weidmann at the Bundesbank’s annual press conference on Thursday. The risk provisions thus remain unchanged at €14.4 billion. The risk situation has eased to some extent because of the decline in the volume of refinancing loans and the reduced holdings of government bonds under the Securities Markets Programme (SMP)", Weidmann said. However, he added that it would not be appropriate to run down the risk provisions, as the lower key interest rates meant that the Bundesbank was likely to post a smaller profit in 2014, thus reducing its available financial resources (AFR).
Weidmann stressed that the financial and sovereign debt crisis had continued to have a defining influence on economic developments in 2013. The countries worst affected by the crisis have made discernible progress in the necessary process of adjusting their economies, and confidence is gradually being restored", he said. Even so, he stressed that the heavy debt burden and the ongoing structural problems in the euro area meant that the European and global economies remained very vulnerable to shocks. He emphasised that, in view of the continuing challenges, it would clearly be premature to declare that the sovereign debt crisis was over. Substantial and persistent efforts will be needed to achieve a lasting solution to the crisis and its underlying structural causes", he said.
Weidmann pointed out that the world economy had picked up speed again over the course of 2013, a development driven in part by a particularly expansionary monetary policy. In the course of this process, the German economy had likewise recovered from the brief dip seen in the latter part of 2012 and early part of 2013, he noted. The pace of growth in the German economy is likely to increase again in 2014 and 2015", said Weidmann, adding that growth in Germany had been sustained for some time now by domestic activity. That is thanks to the robust state of the German economy", he concluded, emphasising that this was notably reflected in a comparatively low unemployment rate, ongoing employment growth and a rise in gross wages and salaries per employee. Weidmann explained that these factors, combined with the low level of interest rates, were fuelling housing construction, in particular.
The main source of the Bundesbank’s profit for 2013 was interest income of €7.3 billion (2012: €11.0 billion). This was offset in part by interest expenses of €1.7 billion (2012: €2.7 billion), resulting in net interest income of €5.6 billion (2012: €8.3 billion). The decline of €2.7 billion in net interest income is due primarily to the key interest rate cuts made by the European Central Bank in May and November 2013", said Executive Board member Rudolf Böhmler at the Bundesbank’s annual press conference.
Holding gains, by contrast, are not recognised as income. Holding gains arise from the valuation of balance sheet items which are subject to fluctuations in market prices, and they are reported under the balance sheet liability item Revaluation accounts". This item fell from €132.6 billion in 2012 to €88.1 billion in 2013, mainly as a result of the decline of around 31% in the market price for gold (gold €86.9 billion, foreign exchange assets €1.1 billion, securities €0.1 billion).
Further information can be found in the Bundesbank’s 2013 Annual Report; the foreword and main articles are available in English.