The Bank of Spain recorded a net result of zero euros during 2023 compared to the profits of 2,402.6 million euros that it recorded the previous year, as reported today, Wednesday. The organization has managed to avoid losses by releasing provisions worth 6,611.94 million euros, being the first time in the history of the Bank of Spain that it has not made a profit.
Last year, the Bank of Spain had contributed 1,606.81 million euros to increase its provision cushion, which at the end of 2022 reached more than 33,000 million euros. “The unconventional monetary policies of the last decade, in combination with the interest rate increases, started in 2022 to combat inflation, explain this novel situation,” explained the governor, Pablo Hernández de Cos.
“A central bank has a balance and an income statement, like companies. But, unlike them, its objective is not to make profits but to fulfill its mandate, in particular, to maintain price stability,” the governor continued. In any case, De Cos has recalled that the monetary policy of price stability is not conditioned by the income statement. He has insisted that this is a “transitory situation” and that the patrimonial solidity “will not be compromised at any time.”
Without advance notice to the Public Treasury
Due to the losses that the Bank of Spain had been recording, on November 1 it did not make any advance to the Treasury. Nor will it happen on March 1, when the remaining amount is usually deposited until 90% of its profit is reimbursed to the public coffers.
The impact of the release of provisions has alleviated the large decrease in total income, which in 2023 stood at 624.17 million euros, 79% less than the previous year. Net interest income was negative by 8.9 billion euros, as interest expenses multiplied almost fivefold, to 27,527.56 million euros. On the other hand, interest income only increased by 87.4%, to 18,626.87 million euros.
In addition to the positive impact on income from the release of 6,611.94 million euros of provisions, we must also take into account the extraordinary effects of the redistribution of monetary income, which reached 3,146.75 million, 132% more.
The operating expenses of the Bank of Spain between January and December were 641.59 million euros, 8% more. By item, personnel expenses were 336.82 million, 5.4% more, while expenses on goods and services reached 203.54 million euros, 8.6% more. The cost of banknote production reached 74.08 million (+19.4%).
Supplies and gold holdings
Virtually all of the Bank of Spain’s provisions (26,974.29 million euros) were intended to cover financial risks (26,375.24 million). Likewise, it also had 471.27 million to cover operational property risks and another 104.08 million for death and retirement relief.
Gold holdings at the end of the year amount to 16,910.85 million euros, equivalent to 9,054 million troy ounces (31.1 grams, as opposed to normal ounces, which weigh 28.3 grams) of fine gold, valued at a price of market of 1,867.83 euros per ounce. These holdings have not changed during the year. Its value is 1,464.47 million euros higher than in 2022, as a consequence of the increase in the market price (at the end of 2022, the ounce was trading at 1,706.08 euros), this increase having been recorded within the revaluation accounts of the passive.
The soil of Hernández de Cos
On the other hand, the annual accounts of the Bank of Spain also show that its governor, Pablo Hernández de Cos, obtained a gross salary of 206,603.58 euros (+3% compared to 2022) and his personal benefits were 30,554.7 euros ( +2.7%). The deputy governor, Margarita Delgado, received last year a gross salary of 195,360.75 euros and personal benefits of 36,018.33 euros, with the same increases compared to last year as the governor.
The non-born members of the Governing Council receive a gross annual allowance of 61,201.29 euros; If they belong to the Executive Committee, said gross allocation is 76,805.32 euros.
Along with the above, the members of the governing bodies receive equal amounts as per diems for attending the sessions of said bodies, set at 1,213.26 euros per session of the Governing Council and 581.88 euros per session of the Executive commission. . The organization closed the year with a workforce of 3,473 employees, 42 more workers, of which 52% are women.
