ECB reports a loss of €1.3 billion for 2025

The European Central Bank (ECB) reported a loss of €1,254 million for 2025, compared to a loss of €7,944 million in 2024. The reduction is mainly due to a decrease in net interest expense. The loss will remain on the ECB’s balance sheet to be offset against future profits. Consequently, there will be no profit distribution to euro area national central banks for 2025.

The losses since 2022 follow years of substantial profits and are the result of policy actions aimed at maintaining price stability. These policies involved expanding the ECB’s balance sheet through asset purchases, which increased liabilities on which interest is paid at variable rates. Rising interest rates in 2022 and 2023 increased interest expenses, while income from securities purchased under the Asset Purchase Programme (APP) and Pandemic Emergency Purchase Programme (PEPP) did not increase proportionally. Since 2024, decreasing interest rates and maturing securities have reduced interest expenses, lowering net interest costs in 2025.

The ECB expects to return to profit in 2026 or later, depending on future interest and exchange rates, as well as balance sheet composition. Its financial strength remains solid, with capital and revaluation accounts totaling €71 billion at the end of 2025, up €12 billion from 2024.

Interest income and expenses in 2025 were as follows: Interest expenses decreased significantly from 2024, mainly due to lower interest on the ECB’s TARGET liabilities, driven by a lower average remuneration rate of 2.3% in 2025 compared to 4.1% in 2024. This reduction was due to lower ECB interest rates and the application of the deposit facility rate. Lower TARGET balances from maturing securities also contributed. Interest income on claims related to euro banknotes in circulation and foreign reserves declined, partly due to lower interest income from US dollar-denominated securities. However, interest income on securities for monetary policy purposes remained stable.

Exchange rate write-downs amounted to €1,316 million, mainly from depreciation of the Japanese yen, partially offset by realized exchange rate gains from rebalancing foreign reserves. Total staff costs decreased to €809 million, mainly due to lower expenses for post-employment benefits. Operating expenses slightly declined to €619 million, mainly from lower depreciation charges. Supervisory fee income increased slightly to €690 million.

The ECB’s balance sheet decreased by €37 billion to €603 billion, mainly due to reductions in APP and PEPP holdings from redemptions. The Eurosystem’s total balance sheet at the end of 2025 was €6,293 billion, down from €6,421 billion in 2024, primarily due to declines in securities holdings, partially offset by an increase in gold holdings to €1,274 billion, driven by rising gold prices in euro terms.

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