Publication of Annual Report and Annual Performance Statement 2018

• Annual Report and Annual Performance Statement show the scale and variety of work undertaken by the Central Bank last year.
• Given the uncertainty around a number of risks, both domestic and international, we should take a prudent approach and build resilience into the financial system.
• Financial profit of €2.98 billion reported for 2018. Surplus income of €2.38 billion will be paid to the Exchequer.

The Central Bank of Ireland has published its 2018 Annual Report (PDF 3.82MB) and Annual Performance Statement (PDF 2.11MB). The reports provide an overview of the key activities and work undertaken by the Central Bank, working in the public interest to safeguard monetary and financial stability and to ensure that the financial system operates in the best interests of consumers and the wider economy.

Speaking at the launch Governor Philip R. Lane said, “Ensuring that the financial system is resilient and able to withstand adverse shocks is a core element of our work. To help build resilience, we have continued to develop our macro-prudential tools. Over the past year, we reviewed and maintained our mortgage measures to enhance lender and borrower resilience and mitigate the risk of credit-house price spirals. We also activated the countercyclical capital buffer (CCyB), with the aim that extra capital will enable banks to be better prepared for future downturns.

We have also requested the power to activate the Systemic Risk Buffer from the Minister for Finance. This buffer would ensure that the banking system would be resilient in the event of a structural shock to the Irish economy.”

In ensuring resilience, he also highlighted the importance of tackling the excessive stock of non-performing loans in the banking system, given the financial stability risks associated with such loans in the event of a future downturn. At the same time, he emphasised that the Central Bank has worked to ensure that the management of non-performing loans by both banks and non-banks complies with its consumer protection mandate.

In addition, 2018 saw considerable progress in the Tracker Examination: the latest update shows that €647 million has been returned to 39,800 affected customers, while enforcement cases against the six main lenders are ongoing. During 2018, the Central Bank also published a detailed assessment of the behaviour and culture of the Irish retail banks and set out related reform proposals to enhance the individual accountability of senior bank executives.

He added that “much our time and resources over the last year have been focused on Brexit, in terms of contingency planning, risk management and firm authorisations. We will continue to analyse and work to mitigate the risks posed to the economy, consumers, the financial system, and the regulatory environment. We will also continue to work to ensure that financial services firms have robust contingency plans to cope with all Brexit scenarios.”

He announced a financial profit of €2.98 billion for 2018. He said: “After retained earnings, surplus income amounting to approximately €2.38 billion will be paid over to the Exchequer. While the last number of years has seen elevated levels of surplus income, the fading out of the temporary accounting impact of the special portfolio of floating rate notes means that headline profits will normalise over the medium term.”