In 2009, the Oesterreichische Nationalbank (OeNB) achieved a somewhat higher operating profit than in 2008. Adjusted for transfers to risk provisions, writedowns on foreign currency and securities as well as transfers from provisions in respect of monetary policy operations of the Eurosystem, the OeNB’s net operating profit came to EUR 318 million in 2009 (2008: EUR 47 million). OeNB President Claus J. Raidl presented these and other key financial statement figures today at a press conference held after the General Meeting of the OeNB in Vienna. The central government is going to receive EUR 272 million (2008: EUR 40 million) from the OeNB with respect to the financial year 2009, EUR 79 million of which are corporate income tax and EUR 193 million the government’s share in the OeNB’s profit, which corresponds to 90% of the latter.
Governor Ewald Nowotny emphasized that “the OeNB’s returns and profits have improved in 2009 compared with 2008,” stressing that this improvement was achieved despite the global economic crisis, comprehensive monetary policy measures and substantial transfers to risk provisions in the range of EUR ½ billion. The OeNB was successful in offsetting the decrease in interest income by fine-tuning its reserve management strategy, under which it sold foreign currency assets and invested in just a small number of currencies, including the euro.
Even though net interest income contracted by EUR 190 million or 23% to EUR 626 million compared with 2008 given the very low level of interest rates, the OeNB’s total net income jumped by EUR 267 million or 91% to EUR 561 million in 2009, not least because writedowns on financial assets dropped sharply by EUR 590 million or 95% to EUR 34 million (2008: EUR 625 million).
The OeNB’s expenses totaled EUR 244 million in 2009, which is a decrease by 1.7%. According to a more detailed breakdown of expenses, staff costs rose by about EUR 7 million to EUR 119 million. “The increase in staff costs reflects above all the need to recruit new employees for the OeNB’s banking supervisory function,” Governor Nowotny explained. As a result, OeNB staff figures expanded to 984 compared with 968 full-time equivalents in 2008.” At EUR 83 million, administrative expenses remained roughly at the level of 2008, whereas other expenses were significantly lower than in 2008.
The OeNB’s profit for the year 2009 comes to EUR 21.4 million. The General Meeting that convened today decided to allocate EUR 1.2 million thereof to pay a 10% dividend on the OeNB’s capital stock of EUR 12 million and to allocate EUR 8 million to the OeNB Anniversary Fund for the Promotion of Scientific Research and Teaching. The remaining EUR 12.2 million will be used to increase the OeNB’s profit-smoothing reserve. In addition, the OeNB has appropriated a total of EUR 75 million for the National Foundation for Research, Technology and Development, which will be transferred to the National Foundation on the day after the General Meeting.
Furthermore, the General Meeting decided to transfer the shares of any nongovernmental stakeholders that had retained participating interests in the OeNB to the Republic of Austria. Those former stakeholders include, above all, Raiffeisen Zentralbank Österreich AG, the Austrian Federal Economic Chamber, the holding company B&C Beteiligungsmanagement GmbH, the insurance group UNIQA Versicherungen AG and the Federation of Austrian Industries. Furthermore, the General Meeting reelected Walter Rothensteiner for another five-year term as a member of the OeNB’s General Council.
The economic framework conditions under which the Eurosystem and, thus, the OeNB operated in 2009 continued to be characterized by the global financial and economic crisis. The strong and massive response to the crisis by monetary and fiscal policymakers was instrumental in halting the sharpest economic contraction since the end of World War II and in putting the world economy back onto a moderate, if still fragile growth path.
At the same time, the Eurosystem continued to fulfill its statutory mandate of maintaining price stability in the medium term. Using a combination of sharp interest rate cuts and unconventional monetary policy measures, the Eurosystem kept the inflation rate in the euro area in positive territory – at a level of 0.3% – and made sure that inflation expectations remained anchored at levels that were close to, but below 2% in 2009. Inflation in the euro area has, in fact, been in line with the Eurosystem’s definition of price stability since the introduction of the euro in 1999, averaging at a level of slightly below 2% during all those years. During most phases of the crisis, the euro – which has become legal tender for some 327 million people – shielded the whole of Europe from deeper turmoil and served as an anchor of stability for Europe. As the euro area economy began to recover toward the end of 2009, the Governing Council of the ECB started to unwind some of the extraordinary liquidity measures with which it had first responded to the crisis, and it has since discontinued further measures in March and April 2010.
In the spring of 2010 financial markets were thrown into renewed turmoil through the fiscal crisis of Greece. Even the agreement to support Greece that international policymakers reached after prolonged negotiations and the three-year austerity package that Greece adopted failed to calm the markets. Much rather, further waves of speculation against other euro area countries with high deficit ratios were looming on the horizon.
“The financial stabilization mechanism – funded by the European Commission, the euro area countries and the IMF – as well as the accompanying measures taken by the Eurosystem were essential and necessary for preventing the fiscal and debt crisis from spilling over in the short term, and for paving the way for sustained stabilization,” said Governor Nowotny.
The leeway thus won must be used resolutely to implement sustained national structural and fiscal policies, and it will take credible consolidation packages to reinforce the reduction of deficits and of high debt levels. With regard to the institutional framework at the European level, there is a need to launch measures aimed at strengthening cooperation, ensuring rapid responses to public fiscal crises, making monitoring more effective and applying the Stability and Growth Pact more stringently. The clear objective of this framework must be to strengthen the stability of the euro area. The monetary policy measures that the Governing Council of the ECB adopted in May 2010 will not change the Eurosystem’s monetary policy stance; the Eurosystem does not engage in any “quantitative easing.” The primary objective of the fiercely independent Eurosystem is and remains to maintain price stability in the euro area.
Turning to domestic developments, economic activity is going to pick up again in Austria in 2010 and 2011. After having contracted by 3.4% in 2009, GDP is projected to grow by approximately 1½% in 2010. The most recent projections for 2011 imply that this rate may be even somewhat higher in 2011. Conditions in the labor market started to improve in March 2010; unemployment is going down, and employment and vacancy figures are rising again. This notwithstanding, the unemployment ratio is likely to be higher in 2010 than it was in 2009 (4.8%). The pace of inflation has accelerated recently, given a surge in fuel prices, to 1.8% in both March and April 2010. From today’s perspective, the annual growth rate of inflation rate will, however, remain below the 2% benchmark in 2010 (and 2011).[In more detail, the OeNB’s economic outlook for Austria for the period from 2010 to 2012 will be published on June 14, 2010].
Ensuring financial stability – the OeNB’s second objective, next to the primary objective of maintaining price stability – called for special measures in 2009. Among other things, the OeNB played a key role in establishing the European Bank Coordination Initiative. In particular in early 2009, the Vienna Initiative, as it has also come to be known, provided a crucial contribution to safeguarding financial stability in Central, Eastern and Southeastern Europe and, as a consequence, also in Austria. In managing the banking crisis, the OeNB responded effectively to individual incidents. Cooperating closely and efficiently with the Austrian Financial Market Authority, the OeNB relied on both macroprudential analysis and on evidence based on microprudential supervision. Cooperation with foreign supervisory authorities was intensified as well. Moreover, the OeNB contributed to the design of the newly established European supervisory framework, within which it will be represented on the European Systemic Risk Board.
The crisis has highlighted the crucial policy role of the OeNB, which acts independently, effectively, efficiently and cost-consciously in fulfilling its mandate to maintain price and financial stability. To be well prepared for future challenges, the OeNB has defined a new strategy for the years 2010 to 2015. With a view to further reinforcing the process of specialization, this strategy provides for strengthening the OeNB’s core functions and streamlining internal support functions. At the same time, staff numbers will be cut, despite the OeNB’s – enlarged – portfolio of highly challenging tasks, by more than 10% by 2015.
The OeNB’s Annual Report 2009 comprises the Financial Statements for 2009 and describes the activities of the OeNB in 2009. Published as the OeNB’s Sustainability Report, the Annual Report also contains the Intellectual Capital Report 2009 and the Environmental Statement 2009(for more information see www.oenb.at).