National Bank of Belgium: Result and distribution of profits for the year 2021PDF

2022-03-30

Regulated information (inside information) disseminated by the National Bank of Belgium on 30 March 2022 at 5:45 p.m. CET.

Result and distribution of profits for the 2021 financial year

On 30 March 2022, the Council of Regency of the National Bank of Belgium approved the annual accounts for the financial year 2021 in accordance with article 44 of the statutes. The statutory auditor has issued an unqualified opinion on the annual accounts and has confirmed that the accounting data in this press release is consistent with the annual accounts.

The annual accounts and the directors’ report are available on the Bank’s website(French Dutch).

Results

In 2021, the Bank’s net profit is lower than that of the previous financial year (-€306 million), at €355 million.

The main explanatory factors are detailed below:

General structure of the result

(in millions of euros)

This decrease in profit is mainly due to the increase in the Bank’s contribution to monetary income (- € 380 million1) and the decline in net income from financial operations (-€27 million). However, this effect was partly offset by net interest income which increased by €55 million. The main reasons for this increase are:

1 The amounts in parentheses indicate the impact on the income statement

Communication

boulevard de Berlaimont 14

telephone + 32 2 221 46 28

Business Number :

National Bank of Belgium SA

1000 Brussels

www.nbb.be

0203.201.340 – RLP Brussels

  • – higher volumes on current accounts and the deposit facility and excess reserves (+ € 409 million);

  • – a higher volume (- € 339 million) and lower interest rates (- € 62 million) on monetary policy credit operations which were carried out at negative interest rates;

  • – the increase in the volume of the monetary policy portfolios (+ € 66 million).

The Bank’s contribution to the allocation of monetary income increased significantly by 380 million euros, mainly through:

  • – the increase in the amount pooled with the Eurosystem (-€269 million);

  • – the fall in monetary income reallocated to the Bank due to the fall in the total monetary income of the Eurosystem (- € 108 million);

  • – in addition, the provision for monetary policy operations set up in 2018 was fully reversed in 2020 and no allocation was made to this provision in 2021.

The net result from financial operations decreased mainly due to the increase in the dollar interest rate (- € 40 million). Conversely, capital gains on the euro securities market increased sharply due to transactions in securities held for monetary policy purposes, partially offset by a disappearance of results on MTM securities (+ 42 millions of euros). Unrealized losses on dollar-denominated securities taken to the income statement increased sharply (-€28 million).

The sale of the printing house generated an accounting profit of € 19.3 million, included in other income.

Distribution of profits

The minimum amount of the Bank’s reserves is determined on the basis of an estimate of quantifiable risks. All of the Bank’s financial risks are quantified either according to the value at risk/expected shortfall methodology, for which the Bank uses very prudent parameters in terms of probabilities and maturities, or according to long-term scenarios.

The estimate of the lower risk limit at the end of 2021 leads to an amount of around €5.8 billion, compared to €6.5 billion at the end of 2020. This reduction is mainly due to the decision of the Board of ECB governors to gradually reduce asset purchases so that the monetary policy stance continues to evolve in the direction of stabilizing inflation at the medium-term objective level. However, the current environment of growing uncertainties about the sources and course of inflation and the impact of geopolitical issues may have a significant influence on future policy and on the evolution of risks, confirming the need for cautious approach in this area.

This amount includes the financial risks on:

  • the Bank’s own securities portfolios in euros and in foreign currencies;

  • the portfolios of monetary policy securities recorded on the Bank’s balance sheet, for which it alone bears the risks;

  • monetary policy credit operations and securities portfolios appearing on the balance sheet of all Eurosystem NCBs, on which the risk is shared between them (see notes 5 and 7 of the notes to the annual accounts).

The increasing volume and composition of the balance sheet, and in particular the APP and the PEPP, imply the risk of seeing the results of the Bank under pressure, in particular in the event of a rise in interest rates. Under these conditions, the Bank maintains its reserve policy at 50% of the profit for the year for as long as the period of unconventional monetary measures lasts.

Thus, an amount of 177.7 million euros is allocated to the available reserve. After distribution of profits, the Bank’s cushions amount to 7.1 billion euros. Moreover, the current profit is the first buffer used to cover possible losses.

The dividend policy remains unchanged. This results in a gross dividend of €138.04 per share, up 30.5% compared to the 2021 financial year, mainly due to the payment this year of a dividend of €31.3 million per the BRI and the net capital gain generated by the sale of the printing works building (€ 18.1 million).

Communication

boulevard de Berlaimont 14

telephone + 32 2 221 46 28

Business Number :

National Bank of Belgium SA

1000 Brussels

www.nbb.be

0203.201.340 – RLP Brussels

The balance of the profit for the financial year is allocated to the State, in accordance with the organic law. For the year 2021, it amounts to 122.5 million euros.

The dividend is payable on the fourth bank business day following the General Meeting of Shareholders, scheduled for May 16, 2022. On this date, it will be paid automatically to holders of dematerialized shares and registered shares.

Post balance events

In light of recent geopolitical developments, the Bank would like to point out that it does not hold any assets directly exposing it to credit risk on Russia.

Communication

boulevard de Berlaimont 14

telephone + 32 2 221 46 28

Business Number :

National Bank of Belgium SA

1000 Brussels

www.nbb.be

0203.201.340 – RLP Brussels