The European Central Bank said Thursday it had again increased its profit in 2017, as interest on its massive bond holdings and dollar reserves flowed into its bottom line. Net profit at the ECB rose around 8.0 percent year-on-year, to 1.28 billion euros, the bank said in a statement. The fatter bottom line was “mainly as a result of higher net interest income earned on the US dollar portfolio and the asset purchase program portfolio,” the ECB said.
The ECB does not aim to itself make a profit, and any earnings are distributed to the 19 central banks of the countries using the euro single currency known collectively as the Eurosystem. Since 2015, the Euro-system has bought almost 2.3 trillion euros ($2.8 trillion) in government and corporate bonds under the so-called “quantitative easing” or asset purchase program.
Over the past year, QE helped push the total size of the network’s balance sheet to almost 4.5 trillion euros, up from 3.7 trillion at the end of 2016. Alongside cheap loans to banks and ultra-low interest rates, the scheme is supposed to boost lending in the euro area, firing growth and coaxing inflation towards the central bank target of just below 2.0 percent.
At present, policymakers say it will continue at 30 billion euros per month until at least September, with most observers expecting a gradual winding down after that in light of strong economic performance in the eurozone. As well as returns on its QE holdings, interest on the ECB’s assets denominated in dollars some 76 percent of its foreign currency reserves flowed into the bottom line.
And it reported a 14.4-percent increase in income from fees it charges to major euro area banks that it supervises directly, to 437 million euros, as it stepped up the number of staff keeping tabs on banks.