Price stability has been largely restored

The Oesterreichische Nationalbank (OeNB) presents its financial statements and Annual Report for 2024

“Demonstrating great resolve in 2024, the Eurosystem including the OeNB succeeded in driving down inflation,” said Robert Holzmann, Governor of the OeNB, when presenting the OeNB’s annual financial statements and Annual Report for 2024. Governor Holzmann also stated that the OeNB continued to fulfill all of its tasks in an effective manner in 2024. Apart from monetary policy, the OeNB in particular helped safeguard financial stability and ensured smooth, efficient payment transactions. It also provided Austrian consumers and businesses with high-quality, secure cash and enabled well-founded, data-driven decisions with its numerous statistics. Moreover, the OeNB has also been involved in the preparations for the digital euro, a strategic goal of the euro area.

In 2024, euro area inflation moved toward the price stability target of 2%, which is why the Governing Council of the ECB started lowering its key monetary policy interest rates. “Last year, key interest rates were cut in four steps by 100 basis points and by 25 basis points each in January and March 2025,” continued Robert Holzmann. “The Austrian economy seems to have bottomed out and is expected to stabilize in 2025.” A noticeable recovery will, however, only begin in the second half of 2025. Given the poor starting point, the Austrian economy will still stagnate at –0.1% in 2025 as a whole. In 2026 and 2027, the recovery will be taking hold, with growth rates running to 1.2% in both years. At this juncture, the Austrian economy must rise to a number of challenges, however. First, at an expected 3.8% of GDP, the 2025 budget deficit will exceed the Maastricht threshold of 3%. Second, higher household energy prices prevent inflation from declining further, so that it will remain at 2.9% in 2025. Third, US president Trump’s threat to impose tariffs poses further risks to growth and inflation. By contrast, Germany’s economic stimulus package could lead to positive growth effects.

In 2024, the OeNB, like the ECB and many other central banks, again recorded a loss as a result of monetary policy operations. However, this is no cause for concern, as the OeNB remains fully capable of fulfilling its tasks. “Whether central banks make profits or losses is a subordinate result of their mandate to maintain price stability in the medium term. It is this objective that is driving the monetary policy decisions that we make in the Governing Council of the ECB,” explained Governor Holzmann.

“Inflation had been set off by a number of extraordinary crises, such as the COVID-19 pandemic and Russia’s war against Ukraine. In response, the Governing Council of the ECB used its arsenal of monetary policy instruments to restore price stability – and its strategy panned out. At the same time, the monetary policy response has left its mark on the OeNB’s balance sheet and profit and loss account,” said Vice Governor Edeltraud Stiftinger, introducing the OeNB’s financial statements. On December 31, 2024, the OeNB’s total assets amounted to EUR 237 billion, down EUR 10 billion or 4% compared to the previous year. The securities that had been purchased under the ECB’s asset purchase programs to withstand the crises are now maturing without being reinvested. In the coming years, central bank balance sheets are therefore set to continue shrinking. “This means that negative operating results are past their trough and things are starting to look up again,” emphasized Vice Governor Stiftinger.

For 2024, the OeNB recorded an operating result of –EUR 2,122 million. Starting in 2022, different interest rates applied to monetary policy assets and liabilities, which gave rise to a so-called asset liability mismatch. Specifically, in times of crisis, the OeNB purchased many securities and government bonds with low or negative interest rates. While this monetary policy response played a major role in staving off deflation, stabilizing financial markets and keeping the economy afloat, the OeNB benefited only marginally in financial terms. In turn, the OeNB has had to pay higher interest rates on the deposits it holds for Austrian credit institutions. This meant that when interest rates were raised to keep inflation in check, the OeNB’s interest expense rose as well.

On an annual average, Austrian banks’ deposits with the OeNB summed up to EUR 87 billion in 2024. The OeNB remunerated these deposits at an average rate of 3.7%. As a result, the OeNB’s interest expense, which translated into income for the banks, was substantial. By contrast, on the asset side, the OeNB held an average of EUR 107 billion in securities for monetary policy purposes. Most of these securities were acquired at low interest rates, which is why the OeNB received comparatively low interest income on them. “In 2024, the OeNB paid interest to credit institutions that was six times the yield it earned on the monetary policy asset purchase programs. On a positive note, the OeNB’s assets outweigh its losses by far. As a case in point, the value of its gold holdings rose by one-third last year,” summarized Vice Governor Stiftinger.

The OeNB’s loss for the year totaled –EUR 4,184 million, after taking into account the loss of –EUR 2,062 million carried forward from the previous year. The loss for the year 2024 will be carried forward in full to the 2025 financial year. As in 2024, no profit share is distributed to the Austrian government. The monetary policy burden will decrease for the OeNB in the foreseeable future. The OeNB expects to make profits again, which it will use to compensate for the losses incurred. The OeNB’s financial strength therefore remains unaffected.

“Austria is still a cash country – even in an increasingly digital world. In fact, 94% of Austrians still use cash regularly,” explained Executive Director Eduard Schock. To meet this obvious need of the Austrian population, the OeNB would welcome the creation of new framework conditions for cash. Such a framework would ensure that people have access to and can pay with cash in the long term. Apart from strengthening consumer rights, this would guarantee that consumers may use the payment method of their choice. Specifically, the OeNB advocates for strengthening the obligation to accept cash and for maintaining a smooth cash supply across Austria. If this did not work on a voluntary basis, regulatory measures would have to be considered in a next step. Executive Director Schock sees the planned introduction of the new euro banknote series as a strong signal for the future of cash in Europe. Currently, decisions are being made on the motifs on the new bills.

“Thanks to the efforts of credit institutions and to supervisory measures, financial stability in Austria was strengthened further in 2024. International institutions such as the IMF attest to the resilience of the Austrian banking sector, which is also confirmed by rating agencies,” said Executive Director Thomas Steiner, summarizing developments on the Austrian financial market. In 2024, the Single Supervisory Mechanism (SSM) celebrated its tenth anniversary. The SSM has significantly promoted the stability and resilience of the European banking landscape: The capitalization of significant credit institutions both in the euro area and in Austria has increased markedly, as measured by the common equity tier 1 capital ratio.

Governor Robert Holzmann concluded by extending his thanks to the OeNB’s President and Vice President, his fellow Governing Board members as well as the entire staff working at the OeNB for their excellent cooperation in 2024.