The Bank of Israel's net loss rose seven-fold in 2013, due to the appreciation of the shekel against the currencies in which the foreign exchange reserves are held
Net loss rose to NIS 8.6 billion in 2013 from NIS 1.2 billion in 2012. Income from foreign currency reserves fell to NIS 1.9 billion in 2013 from NIS 3.4 billion in 2012. This income does not include NIS 2.2 billion in exchange rate differentials or the increase in unrealized gains from securities, which included in the revaluation accounts on the balance sheet.
Expenses from exchange rate differentials totaled NIS 5.7 billion in 2013, compared with income of NIS 1.7 billion in 2012. Interest expenses to the banks and to the public for makam and term deposits fell to NIS 3.4 billion in 2013 from NIS 5.6 billion in 2012, because interest rate cuts during the year.
The Bank of Israel's salary cost rose to NIS 288 million in 2013 from NIS 264 million in 2012, and pension and severance pay expenses rose to NIS 676 million from NIS 352. Most of the increase was due to the agreement indexing pensions to the Consumer Price Index, signed in 2014, which includes retroactive pension adjustments for 2008-2013, and an increase in actuarial pension liabilities because of the growth in the current pension payment.
Bank of Israel Governor Dr. Karnit Flug said, “The Bank of Israel acts to achieve its objectives stipulated in the law, including maintaining price stability, supporting growth, and supporting financial stability, not to achieve profits. The financial statements, by their very nature, do not indicate the benefit derived by the economy from the financial activities and monetary policy implemented by the Bank of Israel. The appreciation of the shekel, which caused most of the loss this year, reflects developments that are mainly the result of the relatively good state of the Israeli economy compared to other economies. It is precisely in an extreme scenario (which is of course not desirable), in which the state of the economy would be negatively impacted for some reason, that the Bank of Israel would record large profits in the balance sheet. The changes in the guidelines for managing the foreign exchange reserves, decided upon by the Monetary Committee, are expected to improve the Bank’s financial results over time."
Published by Globes [online], Israel business news - www.globes-online.com - on March 30, 2014
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