“The European Central Bank’s financial statements for 2024 show a loss of €7,944 million, which is comparable to the loss of €7,886 million reported in 2023 before the transfer from risk provisions,” the ECB announced in a issued on 20 February 2025. “In 2023 the full release of the provision for financial risks of €6,620 million reduced the loss for that year to €1,266 million, while in 2024 no losses could be covered by this provision as its balance stood at zero. The 2024 loss, like the loss from the previous year, will remain on the ECB’s balance sheet to be offset against future profits. As a result of the loss, there will be no profit distribution to euro area national central banks for 2024.”
The ECB explained that the losses are the results of policy actions that were taken to maintain price stability. These losses come after several years of profits. Previous communiqués from the ECB said that profits were thanks to income earned on the US dollar portfolio and on the asset purchase programme (APP) portfolio.
“These policies [to maintain price stability] required the ECB to expand its balance sheet by purchasing financial assets, mostly with fixed interest rates and long maturities,” said the press release. “This was accompanied by a corresponding increase in liabilities, on which the ECB pays interest at variable rates. Thus, increases in the ECB’s key interest rates in 2022 and 2023, which were aimed at combating high inflation in the euro area, resulted in immediate increases in interest expenses on these liabilities, while interest income on the ECB’s assets, in particular on securities purchased under the asset purchase programme and the pandemic emergency purchase programme (PEPP), did not increase to the same extent.”
The Frankfurt-based institution noted that the ECB could still incur losses in the future, but they’re expected to be lower than those seen in 2023 and 2024. The ECB also said that it expects to return to making profit. “Its financial strength is further underlined by its capital and its substantial revaluation accounts, which together amounted to €59 billion at the end of 2024, €13 billion higher than at the end of 2023,” added the press release.