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

Figure 6.5 shows the evolution of gross operating surplus and value added in this sector. Gross operating surplus is the value of production minus all intermediate costs including labour costs while value added does not include labour costs. Except for an increase in 2009, gross operating surplus remained fairly constant up until 2012. A decrease of €330m was seen in 2013. Following this, an increase of €797m was seen in 2014. This increase in operating surplus was passed on to value added which showed an increase of €839m that year. This is attributed to the increase in value of production, trends for which can be seen in Figure 6.6. The value added to GDP was €1.5bn in 2016.

Figure 6.6 above shows the trends in production value and value added by this sector. The production value remained fairly constant at approximately €4.5bn from 2009 to 2013 with slight variation. Production value increased by €709m in 2014. This significant increase in production value was translated into an increase in value added of €839m in 2014, as costs did not increase in line with production value. However, costs in 2015 increased by €757m therefore only a small change in value added can be observed that year. The value of production in 2016 was €5.4bn.

Figure 6.7 shows the evolution of profit before tax. Profit is calculated as the residual of revenue after subtracting costs and interest expenses. These costs include labour costs, intermediate consumption and all other costs.

In 2009 profits increased by €2.16bn before decreasing by €1.07bn in 2010. After this they remained stable until 2013. In 2016 profits increased by €1.82bn on back of increase in revenue by €1.45bn and decrease in interest expenses of 616m.

Treasury Companies

The following figures, 6.8-6.11, show an analysis of data on Treasury Companies which are classified in the S.125 and S.127 sectors. These comprise 38% of total S.125, S.126 and S.127 assets in 2016.

Figure 6.9 shows the balance sheet for Treasury Companies which are classified in both the Other Financial Intermediaries sector (S.126) and Captive Financial Institutions sector (S.127). The largest share of assets is that of Loans (AF.4) which account for €331bn of the total assets of €516bn in 2016. However, the share of Loans, as a percentage of the total, has been declining. In 2012 it accounted for 76% of total assets, while in 2016 it accounted for 64%. Alternatively, the share of Equity (AF.5) has increased from 8% in 2012 to 22% in 2016. Total assets have increased by €173bn between 2012 and 2016.

The breakdown of liabilities is similar to that of the assets. The main component of total liabilities is Loans (AF.4) which accounted for €304bn of the €564bn total liabilities in 2016. The share of Loans however decreased from 63% in 2012 to 54% in 2016. The share of Equity has increased from 12% to 40% in the same period. Total liabilities increased by €221bn in the five years shown.

Figures 6.10 and 6.11 show the balance sheet of Treasury Companies by residency. Assets follow a consistent pattern in the five years shown with approximately 20% of assets held in Ireland and 80% abroad. Liabilities follow a similar pattern up until 2016, where liabilities held by Irish residents increased to 36%.

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