Despite the challenging environment, the OeNB’s operating profit for 2008 increased by EUR 91 million or 12% by comparison to the 2007 result and came to EUR 837 million.After adjustment for writedowns on financial assets and transfers to provisions for foreign exchange rate and price risks totaling EUR 791 million, the OeNB’s net operating profit came to EUR 47 million, clearly below the 2007 result of EUR 247 million.OeNB President Claus J. Raidl presented the key financial statement indicators today at a press conference held after the General Meeting of the OeNB.Of the operating profit, EUR 40 million are allocated to the Austrian federal government – EUR 11.7 million of this amount is corporate tax, and EUR 28.3 million the federal government’s statutory 90% share of the OeNB’s profit after taxes.
“The financial and economic crisis has substantially reduced the OeNB’s profits, too,” noted OeNB Governor Ewald Nowotny.The rapid decrease in key interest rates, high volatility in foreign exchange markets, the devaluation of some reserve currencies against the euro and higher risk provisions have cut into the OeNB’s net income, which sank by EUR 196 million or 40% to EUR 295 million in 2008.
“In view of the special challenges a central bank faces in combating the crisis, making high profits is not the primary consideration.Much rather, the OeNB must effectively and efficiently fulfill the responsibilities for monetary policy and financial stability that it has been mandated by law to assume.In 2008, the OeNB had to rise to extraordinary challenges, and it will do so again this year:Comprehensive and flexible liquidity management measures, unprecedented cuts in policy rates, a quantum leap in banking and financial market analysis and the rapid design and implementation of the bank support package were required to stabilize the financial markets and to keep the detrimental consequences for the real economy in check,” explained Governor Nowotny.
Despite the exceedingly difficult environment, the OeNB’s total expenses rose by only 1.6%, markedly less than the rate of inflation, and came to EUR 248 million in 2008. In a breakdown of expenses, staff cost augmented by about EUR 8 million or 8% to EUR 116 million.Coupled with savings in other areas, this increase reflects above all expenses for additional staff hired to fulfill new tasks incumbent on the OeNB since January 1, 2008, in the field of banking supervision.As a result, OeNB staff expanded by 5.5 % to 968 full-time equivalents.As OeNB Governor Nowotny stated, “The cost to the OeNB arising from its banking supervisory tasks alone came to some EUR 13 million in 2008, EUR 4 million of which were reimbursed by the Financial Market Authority.”
The investment income of the National Foundation for Research, Technology and Development (National Foundation) amounted to EUR 21 million in 2008 and is scheduled to be disbursed to the National Foundation the day after the General Meeting.
The profit for the year of the OeNB for 2008 came to EUR 3.2 million.The General Meeting that convened today decided to allocate EUR 0.6 million thereof to pay a 5% dividend on the OeNB’s capital stock of EUR 12 million and to allocate the remaining EUR 2.6 million to the OeNB Anniversary Fund for the Promotion of Scientific Research and Teaching.Moreover, the General Meeting reelected Elisabeth Gürtler-Mauthner, Managing Director of Sacher Hotel Betriebsges.m.b.H., for a further five-year term as a member of the General Council.
The economic crisis affected Austria later in 2008 and less strongly than other countries.However, in the first quarter of 2009, the Austrian economy suffered a severe economic slump.Seasonally and working-day adjusted real GDP fell by 2.8% on the previous quarter, above all because industrial production and goods exports declined sharply, the latter sinking by more than 20% in the first four months of 2009. However, the economy appears to have bottomed out now and should perform less unfavorably in the second quarter.In 2009 as a whole, the Austrian economy is expected to shrink by about the same amount – about 4% – as the entire euro area, according to forecasts by the IMF and the European Commission.
Consequently, it is imperative that the economic stimulus measures that have been adopted be implemented quickly.Austria’s two economic stimulus packages and its tax reform will support growth and employment and will contribute to the stabilization of the Austrian economy in 2010. The low rate of inflation in 2009 (April 2009:0.5%) and in 2010 will bolster disposable income and should support consumption.
As Governor Nowotny observed, “We see neither deflation nor high inflation of prices occurring in the foreseeable future.The risk of factors pushing up inflation is low overall and is controllable in the medium term.At its mid-May meeting, the Governing Council of the ECB made clear that the ample liquidity provided can be rapidly absorbed once the macroeconomic environment improves so that any threat to price stability over the medium to longer term can be effectively countered in a timely fashion.”
In the financial markets, the recent indicators and hard facts signal an easing of tensions:Since mid-March 2009, money markets have normalized to a certain extent, and money market interest rates have continued to decrease.Stock markets – including the Vienna stock exchange – have rallied; premiums for credit default swaps (CDSs) have fallen.The measures adopted at the G-20 summit and international support packages have improved the climate in financial markets.Banking packages adopted at the national and the EU levels have helped calm markets noticeably.The Austrian bank support package of EUR 100 billion has also proved effective.
Guarantees worth EUR 10 billion provided most recently for Austrian companies are expected to provide a further positive impetus.Maintaining price stability, preserving financial stability and actively contributing to the reform of European supervisory structures are the OeNB’s primary tasks.These objectives will also represent the cornerstones of the OeNB’s corporate strategy for the years 2011 to 2015, which will be defined in the course of 2009. The OeNB’s structures will be developed further in line with the division of responsibilities within the European System of Central Banks (ESCB) so that the OeNB focuses more strongly on its key tasks and further improves the quality and efficiency of its services.
Notes on the operating profit for 2008 excluding writedowns and transfers (EUR 837 million):
Excluding writedowns on financial assets (profit and loss account item 2.2) and transfers to/from provisions for foreign exchange rate and price risks (profit and loss account item 2.3), the OeNB’s net operating profit came to EUR 47 million in 2008; the respective writedowns and transfers totaled EUR 791 million.
The OeNB’s Annual Report 2008 contains details about the Financial Statements for 2008 and about the activities of the OeNB in 2008. The Annual Report 2008 together with the Intellectual Capital Report 2008 and the Environmental Statement 2008 form the OeNB’s Sustainability Report.