European Central Bank in the Red, NBS Still Waiting for Business Result

In 2023, the European Central Bank (ECB) recorded an annual loss for the first time in 20 years, reporting a loss of EUR 1.3 billion, the news agencies report. The bank registered considerable key obligation interest expenses, whereas the income from interests on assets did not keep up, as many interests have fixed rates or long due dates, it has been explained. The loss would have been even bigger if the ECB had not used its entire financial risks reserve of EUR 6.6 billion last year. The ECB announced on its website that it expected further losses in the next several years, but that they would not have an impact on its ability to implement an efficient monetary policy, before returning to a sustainable profit.

On that occasion, the Politika daily asked the National Bank of Serbia (NBS) about its operating results in 2023 – whether it was in the black or in the red. They did not get a precise answer, because, as they say, the financial report is not yet prepared.

A week ago, at the presentation of the inflation report, the heads of the NBS said that the high profit of the commercial banks of Serbia was a result of the fact that the NBS had paid them an interest on withdrawing excess liquidity. In other words, the NBS contributed the most to their profitability. When asked how much money the central bank had paid to the commercial banks on that basis, they did not respond.

– The nature of the costs of withdrawing liquidity is not the same for the ECB and the NBS. Regardless of the experience of the ECB, we want to point out that the NBS is not worried, and neither should the public be, about the financial result or the negative impact of the increased costs of the monetary policy in the previous year, especially considering that the NBS is also realizing increased income on FX reserve investments, also in the environment of globally increased interest rates. The increased costs of the liquidity that the NBS has been withdrawing in the past year (and with that the increased costs of their withdrawal) are nearly exclusively a result of the purchase of foreign exchange by the NBS in the local FX market due to appreciation pressures. This way, the NBS has considerably increased the FX reserves, with whose adequate management it is realizing an income – the NBS says.

The NBS, just like all other legal entities in Serbia, in line with the Law on Accounting, prepares the financial report for 2023 by March 31, 2024. The report will show the operating results for 2023. According to the Law on the National Bank of Serbia, the financial report for the previous year, with the opinion of an independent auditor, the central bank is to submit to the National Assembly by June 30 the next year at the latest, and the report is then to be presented to the public, as before.

Narodna banka Srbije Beograd

European Central Bank

ECB

National Bank of Serbia

NBS

financial result

Law on Accounting

financial report