ECB cuts losses and estimates return to profit in 2026. Lagarde's salary rises to €492,000

(Il Sole 24 Ore Radiocor) - The Bce closed 2025 with a loss of EUR 1.254 billion, down sharply from the EUR 7.944 billion recorded in 2024 thanks mainly to lower net interest expenses. The loss will remain on the balance sheet and will be offset against future profits. Consequently, no profits will be distributed to the national central banks of the euro area.

The accumulated losses since 2022, the ECB explained in a statement, are the consequence of the monetary policy measures taken to combat inflation and bring it back to medium-term targets as mandated. These policies led the ECB to expand its balance sheet through the purchase of financial assets, mostly at fixed interest rates and with long maturities. This has led to a corresponding increase in liabilities on which the ECB pays floating-rate interest. Thus, interest rate hikes in 2022 and 2023 to counteract the jump in inflation immediately pushed up interest charges on liabilities, while interest income on the ECB's assets, in particular on securities purchased under the asset purchase programme (Paa) and the pandemic emergency purchase programme (Pepp), did not increase to the same extent. The successive decreases in key interest rates since 2024 and the continued decline in liabilities following the maturity of securities under the Paa and Pepp are substantially reducing the effects of this interest rate mismatch.

The ECB expects to return to profit in 2026 or the following year, "although this will depend on future levels of key interest rates and exchange rates, as well as the size and composition of the ECB's balance sheet". In any case, the ECB "can operate effectively and fulfil its primary mandate of maintaining price stability regardless of any losses. Its financial strength is further underlined by its equity and its substantial revaluation accounts, which together amounted to EUR 71 billion at the end of 2025, EUR 12 billion more than at the end of 2024."

In 2025 the basic salary of President Christine Lagarde was €492,204, up €26,112 from €466,092 the previous year. This is according to the 2025 budget report published today by the ECB, which explains that the members of the Executive Board and the Supervisory Board employed by the ECB receive a basic salary and a residency allowance (equal to 15% of the basic salary). In the case of the President, the residence allowance is provided in lieu.

In the past few days, news has also emerged that Lagarde received around 140,000 euros as a member of the board of the Bank for International Settlements (Bri) in 2025. This was announced by Lagarde herself in response to a question from German and Swedish MEPs, raising the displeasure of the ECB staff for whom there is a ban on receiving remuneration from third parties. As for the basic salaries of the other five members of the executive board, Vice-President Luis de Guindos received EUR 421,908 (up from EUR 399,528 in 2024) while for the other four members, Piero Cipollone, Frank Elderson, Philip Lane and Isabel Schnabel, the basic salary rose by EUR 18,648 to EUR 351,576 from EUR 332,928 the previous year. The total cost of base salaries for the board for 2025 rose accordingly to EUR 2,320,416 from EUR 2,197,332 in 2024. In contrast, the total cost of the Supervisory Board members was EUR 1,604,632 (from EUR 1,364,558 in 2024). The remuneration of the chairwoman of the Supervisory Board Claudia Buch was equal to that of the members of the Executive Board, thus EUR 351,576 compared to EUR 332,928 in the previous year. The total cost of the two boards therefore amounted to EUR 3,925,048, up from EUR 3,561,890 in the previous year. Finally, the total allowances paid to the members of both boards and the ECB's contributions to the health, long-term care and accident insurance schemes for them amounted to €1,320,276, up from €1,254,013 in 2024.