March 27, 2024
Today at
18:09
The National Bank’s loss will increase almost sixfold in 2023 due to the sharp increase in interest costs. Yet, just like last year, she pays a small gross dividend of 1.50 euros.
As expected, the National Bank has had a very bad year. It recorded a record loss of 3.4 billion euros in 2023, compared to 580 million euros in 2022, according to a press release. The sharp increase in losses is mainly due to the deterioration in the interest result. Net interest income fell from 579 million euros to minus 4 billion, because interest expenses rose much faster than interest income.
Net interest income has fallen to minus 4 billion, because interest costs have risen much more than interest income.
Interest costs have increased spectacularly, because the National Bank has to pay much more interest on the cash surpluses that the Belgian banks park with it due to the interest rate increases of the European Central Bank. These deposits amount to approximately 200 billion.
Bond portfolio
Interest income mainly includes the proceeds from the bond portfolio. They rise gradually as maturing bonds with low yields are replaced by new bonds with higher yields.
The National Bank’s buffers have fallen from 6.5 billion to 3.1 billion.
Despite the enormous loss, the National Bank will pay a gross dividend of 1.50 euros, just like last year. This minimum dividend is guaranteed by the reserve fund and the available reserve. Due to the large loss, the buffers have fallen from 6.5 billion to 3.1 billion euros. The National Bank says that its reserves must amount to at least 7.5 billion and that the desired level of reserves is 13.6 billion euros.
Outlook
The prospects for the coming years are poor. The National Bank expects a cumulative loss of 6.1 billion euros in the period 2024-2028. Last year she predicted a cumulative loss of 10.8 billion for the period 2023-2027. Taking into account the loss of 3.4 billion in 2023, this means that the expected losses may have decreased. The National Bank says it will no longer post substantial losses from 2029 and will be profitable again.
The expected losses for the coming years will reduce the capital position (capital plus reserves) below zero. But the National Bank notes that this is not a fundamental problem. “A central bank can continue to perform its tasks with a negative capital position without endangering the continuity of business operations,” she emphasizes. This is where a central bank differs from an ordinary company, which cannot continue to operate with negative equity.
