The Financial Sector in Ireland's National Accounts 2016 - Thematic Research Publication

Source publication: Assets and Liabilities of the Financial Sector 2016

Get the data: StatBank

Source publication: Assets and Liabilities of the Financial Sector 2016

Get the data: StatBank

In 2010 the total amount of assets and liabilities were at their peak, this was largely related to the financial crisis in Ireland. After that the balance sheet decreased every year with an upward trend in 2016. In 2016 the amount of assets was €78.8bn and liabilities was €82.5bn, approximately 40% of the level in 2010.

Assets are largely made up of Currency and Deposits (AF.2) and Debt Securities (AF.3). Since 2010 the contribution of Currency and Deposits (AF.2) has decreased each year. In 2016 it was €11bn, around 6% of the 2010 level. This was due to the conversion of assets from Currency and Deposits to Debt Securities due to securities acquired by the Central Bank following the liquidation of the Irish Bank Resolution Corporation (IBRC). This also explains the change in Securities from €21bn in 2012 to €63.8bn in 2013. Since then it has remained approximately at this level.

Currency and Deposits (AF.2) comprise most of the liabilities side. The liabilities of Currency and Deposits (AF.2) increased until 2010 and have decreased every year since. Except for 2012, Equity and Investment Fund liabilities (AF.5) have increased every year since 2007.

Source publication: Central Bank of Ireland Annual Reports

Overall the amount of expenses in interest decreased over the period, resulting in expenses of €279m in 2016 in comparison to the peak of 2008 (€2.1bn). These peaks were due to the financial crisis which led to high expenses linked to deposits.

The amount of income from interest rose in 2011 to €3.7bn. Since then the amount has been decreasing. The increase to €2.7bn, in 2008, was due to the monetary policy followed during the financial crisis. In addition to this, in 2011 €1.6bn was provided as support for insolvent banks through Emergency Liquidity Assistance (ELA), due to the expiration of the original government bank guarantee. For further details see Central Bank of Ireland Annual Report 2011 (page 105).

Source publication: Central Bank of Ireland Annual Reports

Figure 2.4 shows an increase in staff numbers in 2010, followed by a period of stabilisation until 2014. Staff numbers increased by 151 and 180 in 2015 and 2016 respectively.

Source publication: Central Bank of Ireland Annual Reports

Until 2014 profit mainly consisted of interest income and interest expenses. There has been an upward trend in profit since 2010.

In 2014, surplus income rose further driven by the net realised price gains on securities. This reflected the realised gains on the partial sales of the 5.4% Irish Government Bond 2025 and the 2038 Floating Rate Note (FRN). The net result of financial operations, write downs and risk provisioning increased to €1.25bn in 2016.

The difference between profit before unrealised gains and surplus income can be explained by transfers to reserves and the pension scheme.

Source publication: Central Bank of Ireland Annual Reports

There is a steadily upward trend in the surplus payable to the Exchequer. The increase in 2009 was due to low interest expenses and high interest income. Another significant increase was in 2014. This was driven by an increase in the surplus due to the realised gains on the partial sales of the 5.4% Irish Government Bond 2025 and the 2038 Floating Rate Note (FRN).

In 2016 the surplus income payable to the Exchequer was €1.8bn.

Get the data: Central Bank of Ireland

Overall the external reserves have increased over the period with a clear upward trend in the most recent three years.

Until 2009 the contribution of special drawing rights was not significant. However, after the impact of the financial crisis in 2008, a higher amount of special drawing rights were allocated to provide liquidity to the global economic system and supplement the member country’s official reserves (IMF members). The contribution of SDRs grew from €77m in 2008 to €819m in 2009 and have remained at this level.

During 2015-2016 the reserve position in the IMF increased from €329m to €1.09bn, due to higher membership subscription in 2016 in comparison to the other years.

Furthermore, in 2015 the foreign reserves were approximately €678m which increased to €1.3bn in 2016.

Source publication: Central Bank of Ireland Annual Reports

Overall the issuance of both banknotes and coins has been declining since 2007. In 2016 it was only approximately 28% of the 2007 level for coins with 126 million coins issued. In 2009 the demand of coins fell substantially, caused by weakened economic activity, to just 112 million. This slow downward trend may be related to the development of payments conditioned by electronical payments, better technology and digitalisation.

Source publication: Central Bank of Ireland Annual Reports

Source publication: Central Bank of Ireland Annual Reports

In line with the trend of issuance of banknotes, the value of banknotes also decreased. In 2016 it was about 62% of the 2007 level with a value of banknotes of €9.3bn.

In terms of the value of coins, the increase in 2014 to €64m was mainly accounted for by an increase in demand for low denomination coin. In 2016 the value of coins issued was in line with 2007 levels.

Source publication: Central Bank of Ireland Annual Reports

The number of open market operations is in line with the global financial situation. In 2015 and 2016 the level of open market operations was below the previous years with 128 and 136 operations respectively.

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