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BNR records 2.015 bln RON profit in 2021
The National Bank of Romania (BNR) recorded a profit of 2.015 bln RON in 2021, down 1 percent from the previous year, according to the institution's annual report.
"The financial result as of December 31, 2021 was a profit of 2.015 billion RON, by 1 percent (-19,581,000 RON) lower than the one recorded in the previous year (2,034,776,000 RON), mainly as a result of the following evolutions: an operating profit of 2,482,117,000 RON, 5 percent (+122,538,000 RON) higher than the previous year's figure (2,359,579,000 RON); expenses with unfavorable differences from the negative revaluation of foreign currency securities in amount of 461,124,000 RON, 42 percent (+136,321,000 RON) above the amount of expenses recorded as of December 31, 2020 (324,803,000 RON); net expenses from the revaluation at fair value of buildings and land as of 31 December 2021 in amount of 5,798,000 RON," the BNR report states.
The central bank mentions that the net result of the monetary policy operations for 2021 was a profit worth 135.858 million RON generated mainly by the coupon revenues related to government securities in domestic currency purchased by the BNR (mainly in 2020) with a view to consolidating the banking system's structural liquidity in order to properly contribute to the financing of the real economy and of the public sector, respectively by the revenues from repo operations. The said revenues were higher than the expenses with the interests paid as part of the monetary policy operations (for the minimum required reserves in RON, the attracted deposits and the deposit facility), representing the cost of pursuing the fundamental price stability goal.
The capitalization on foreign exchange assets generated in 2021 an annual return of 1.5 percent. For the bank's liabilities (sources of external assets) the average annual interest rates (paid by the BNR) were lower than the annual return on assets (collected by the BNR) and even negative (amounts collected by the central bank). Also, the assets related to the monetary policy generated in 2021 an annual return of 3.2 percent - above the average annual interest rates paid by the BNR for the monetary policy liabilities. This resulted in BNR recording operating profit.
Therefore, the positive financial result of the National Bank of Romania was mainly determined by the realization of net revenue from the management of foreign exchange assets and liabilities, as well as by net revenues from the use of monetary policy instruments on the domestic market. In 2021, the net revenue from the management of foreign currency assets and liabilities was 2.918 billion RON, and the net revenue from monetary policy operations was 135.858 million RON.
The value in domestic RON of foreign assets as of December 31, 2021 was up by 9.3 percent in nominal terms compared to December 31, 2020 (+20.974 billion RON) and 1.1 percent higher in real terms (+2.621 billion RON).
According to the report, the activity of managing foreign exchange assets and liabilities resulted in revenues worth 4.322 billion RON and expenditures totaling 1.404 billion RON, which stands for a profit of 2.918 billion RON.
As of December 31, 2021, significant favorable differences were registered in the special revaluation account from the revaluation of gold, other precious metals and foreign exchange holdings (totaling 29.057 billion RON, 27 percent higher compared to December 31, 2020), consolidating the National Bank of Romania's own capital. The unfavorable differences (totaling 461.124 million RON) reflected in the profit and loss account, on the expenses side, arise from the revaluation at market value of the holdings of foreign currency securities.
Also, the central bank mentions that the profit for the financial year 2021 was distributed according to Art. 43 of Law No. 312/2004 on the statutes of the National Bank of Romania, and the bulk of the money went into the bank's state budget dues, amounting to 1.610 billion RON. Also, 243.005 million RON were assigned for the increase of the statutory reserves (representing 60 percent of the remaining profit after deducting the share of 80 percent of the net revenues due to the state budget). The remaining profit of 162.004 million RON will be distributed in 2022 according to the legal provisions.