The Banque de France announced on Wednesday the putting in reserves of its 4.4 billion euros of pre-tax profits, in order to “face the years which will be less favorable”, according to its governor, due to the tightening of the policy. monetary.
This is a first since 2003. The Banque de France will not pay this year, nor in those to come, a dividend to the State. This amounted to 569 million for 2021 and nearly two billion for 2020.
The institution will pay around one billion euros in corporation tax. The 4.4 billion euros are technically an allocation to a fund for general risks. By deducting this allocation, the net profit for 2022 amounts to zero, compared to 763 million euros in 2021.
Reversal of monetary policy
This year of reversal of the monetary policy, according to the governor of the institution Franois Villeroy de Galhau, who spoke at a press conference, began to produce its first effects on the institution, even if all the revenues have all the same created by about 10% nearly 7 billion euros.
On the results, income related to relations with banks has decreased significantly, deposits having brought in money in recent years due to negative rates. This is no longer true at the end of the year and, on the contrary, they had to be paid, explained the governor.
Another phenomenon, however, mitigated this negative consequence of the monetary tightening: the tightening of conditions for glove loans to banks (TLTRO) made these loans less expensive.
The Banque de France also saw its income from its monetary policy securities more than double, in particular thanks to those indexed to inflation.
The Banque de France in a relatively favorable situation
In this context, the Governor of the Banque de France wished to recall that the institution is in a relatively favorable situation, while several major central banks have already announced losses for 2022, without disclosing the amount, such as that of the United States. United States, United Kingdom or Sweden.
With this new endowment, the Banque de France’s reserves will reach 16.4 billion euros and should enable it to maintain balanced results over the coming years, without seeking recapitalization from the state shareholder, according to the public release.
Over that period, I don’t think any central bank in the world will pay a dividend, declared Franois Villeroy de Galhau, recalling that the cycle of low interest rates that is ending had led to extremely high dividends.
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