The European Central Bank (ECB) reported on Thursday that it operated at a loss in 2024, emphasizing ‘significant’ net interest expenses and depleted reserves for financial risk.
The ECB’s loss amounted to approximately €7.94 billion last year. In 2023, it was only slightly lower, but the bank reduced it to €1.27 billion, fully depleting reserves for financial risk.
The ECB also recorded a loss in 2022, amounting to €1.6 billion, but it was covered by reserves, resulting in a final outcome of a positive zero.
In 2024, the main reason for the loss was again ‘significant’ net interest expenses, as noted in the statement released on Thursday.
Interest expenses exceeded interest income by approximately €7 billion. In 2023, the difference was €7.2 billion.
The interest risk arising from the gap between interest income on assets and interest expenses on liabilities was mitigated in 2024 as the ownership portfolio formed by the policy of stimulating economic growth and prices before 2021 and support during the pandemic crisis was reduced.
The ECB also reported a significantly higher write-off of assets in 2024, amounting to €269 million, mainly due to the decline in market value of part of the securities in the bank’s portfolio denominated in US dollars and the depreciation of the Japanese yen. In 2023, they wrote off only €38 million.
They highlighted that they could operate at a loss in the coming years, but those losses should be lower.
The losses are a result of “necessary monetary policy decisions,” they note, reiterating that they can continue to operate effectively and ensure price stability in the eurozone.
Since mid-last year, the ECB has lowered interest rates in the eurozone by 2.5 percentage points to stimulate demand hampered by high borrowing costs that were intended to curb inflation.
