European Central Bank sees first annual loss in two decades

ISTANBUL

The European Central Bank (ECB) last year recorded its first annual loss in almost two decades, according to a financial statement it released Thursday.

The central bank reported a loss of €1.3 billion ($1.41 billion) for 2023 -- its first annual loss since 2004.

"This loss takes into account the full release of the provision for financial risks, amounting to €6,620 million, which partially covered losses incurred during the year," said the statement.

"There will be no profit distribution to the euro area national central banks (NCBs) for 2023," it added.

The ECB said raising its key interest rates to fight inflation in the euro area resulted in increased interest expenses on its liabilities that are subject to variable interest rates.

Interest income on its assets, however, did not increase to the same extent or at the same pace, since those assets largely have fixed interest rates and long maturities, it added.

The central bank said it is likely to incur losses over the next few years but then expects to return to making sustained profits.

"The financial strength of the ECB is further underlined by its capital and its substantial revaluation accounts, which together amounted to €46 billion at the end of 2023," said the statement.