For the period ended September 30, 2025, unaudited
Context of the Quarterly Financial Report
The Bank of Canada (the Bank) is the nation’s central bank. The Bank’s mandate under the Bank of Canada Act is to promote the economic and financial welfare of Canada. Its activities and operations are undertaken in support of this mandate and not with the objective of generating revenue or profit. The Bank is committed to keeping Canadians informed about its policies, activities and operations.
This report has been prepared in accordance with section 131.1 of the Financial Administration Act and follows the guidance outlined in the Treasury Board of Canada’s Directive on Accounting Standards: GC 5200 Crown Corporations Quarterly Financial Report. Bank management is responsible for the preparation of the report, which was approved by the Audit and Finance Committee of the Board of Directors on November 12, 2025.
This Quarterly Financial Report should be read in conjunction with the condensed interim financial statements for the third quarter of 2025 included in this publication and with the Bank’s Annual Report 2024. Disclosures and information in the Annual Report apply to the current quarter unless otherwise updated in this quarterly report.
Supporting the economy and the financial system
During the COVID-19 pandemic, the Bank used extraordinary measures to stabilize financial markets and support the economic recovery. In response to rising inflation, it raised its policy rate and began quantitative tightening (QT) by letting bonds mature without replacing them. As inflation eased, the Bank began lowering the overnight rate in June 2024 while continuing to normalize its balance sheet. In the first quarter of 2025, the Bank announced its plan to complete its balance sheet normalization, ending QT, and it resumed making asset purchases through its regular term repo operations as part of balance sheet management. This will be followed by Government of Canada treasury bill purchases on the primary market to restore a proportionate mix of assets on the Bank’s balance sheet. Refer to the Bank’s website for more information on these measures, including the relevant press releases and market notices.
Managing the balance sheet
| Condensed financial position (in millions of Canadian dollars) |
|||
|---|---|---|---|
| As at | September 30, 2025 | December 31, 2024 | September 30, 2024 |
| Assets | |||
| Loans and receivables | 24,930 | 19,462 | 16,012 |
| Investments | 192,704 | 236,868 | 242,894 |
| Derivatives—indemnity agreements with the Government of Canada | 18,198 | 19,786 | 19,059 |
| All other assets* | 1,177 | 1,127 | 1,068 |
| Total assets | 237,009 | 277,243 | 279,033 |
| Liabilities and deficiency | |||
| Bank notes in circulation | 122,056 | 121,298 | 118,834 |
| Deposits | 123,407 | 164,359 | 165,288 |
| Securities sold under repurchase agreements | - | - | 2,852 |
| Other liabilities | 292 | 298 | 337 |
| Deficiency | (8,746) | (8,712) | (8,278) |
| Total liabilities and deficiency | 237,009 | 277,243 | 279,033 |
* All other assets includes Cash and foreign deposits, Capital assets and Other assets.
The Bank’s holdings of financial assets arise from its unique role as the exclusive issuer of Canadian bank notes and its operations in support of monetary policy and the broader financial system. The Bank’s total assets decreased by 15% to $237,009 million as at September 30, 2025, compared with their value as at December 31, 2024. The main driver of this decline was the maturity of investments, which was partially offset by an increase in loans and receivables, specifically term repos.
Loans and receivables increased by $5,468 million compared with December 31, 2024. This increase was driven mainly by the addition of term repo transactions following the Bank’s decision to restart the program in March 2025. Term repo operations are conducted to manage the Bank’s balance sheet and support the effective implementation of monetary policy. These operations have generally occurred on a biweekly basis through September 30, 2025. The increase was partially offset by a decrease in overnight repo transactions outstanding compared with December 31, 2024.
Investments declined by 19% compared with December 31, 2024, to $192,704 million as at September 30, 2025. This decrease was driven mainly by a reduction in investments in Government of Canada securities, which include nominal bonds and real return bonds. In particular, Government of Canada bonds held at fair value decreased by $28,921 million, and those held at amortized cost decreased by $11,402 million. These declines are largely due to the bonds maturing, though this was partially offset by increases in the market value of the investments.
Derivatives—indemnity agreements with the Government of Canada refers to the agreements in place to indemnify the Bank and allow it to support Government of Canada, provincial and corporate bond markets. Any losses resulting from the sale of assets within the Government of Canada Bond Purchase Program and the Provincial Bond Purchase Program are indemnified by the Government of Canada, whereas any gains on disposal are remitted to the government. The $18,198 million balance represents the fair value of the derivatives associated with the net unrealized losses on these assets as at September 30, 2025. Derivatives decreased by $1,588 million during the nine-month period, mainly due to a decline in bond yields and total holdings. This is represented in the asset profile chart by “All other assets.”
Bank notes in circulation represents approximately 50% of the Bank’s total liabilities (42% as at December 31, 2024). Bank notes in circulation increased slightly compared with December 31, 2024, to $122,056 million as at September 30, 2025, reflecting seasonal variations in demand.
Deposits represents 50% of the Bank’s total liabilities as at September 30, 2025 (58% as at December 31, 2024) and consists of deposits made by the Government of Canada, members of Payments Canada and others. This balance declined by 25% to $123,407 million as at September 30, 2025, compared with December 31, 2024, reflecting continued normalization of the balance sheet.
Deficiency increased to $8,746 million as at September 30, 2025, as a result of a $34 million comprehensive loss during the first nine months of the year. As at September 30, 2025, the accumulated deficit was $10,046 million. Deficiency also includes the following offsetting amounts: $5 million of authorized share capital, a special reserve of $100 million, an investment revaluation reserve of $631 million and an actuarial gains reserve of $564 million. Refer to Note 10 in the condensed interim financial statements for more information.
Results of operations
| Condensed results of operations (in millions of Canadian dollars) |
||||
|---|---|---|---|---|
| For the three-month period ended September 30 | For the nine-month period ended September 30 | |||
| 2025 | 2024 | 2025 | 2024 | |
| Interest revenue | 816 | 964 | 2,448 | 2,700 |
| Interest expense | (578) | (1,523) | (2,159) | (4,772) |
| Net interest income (expense) | 238 | (559) | 289 | (2,072) |
| Other revenue | 5 | 3 | 20 | 15 |
| Total income (loss) before operating expenses | 243 | (556) | 309 | (2,057) |
| Total operating expenses | (180) | (176) | (538) | (519) |
| Net income (loss) | 63 | (732) | (229) | (2,576) |
| Other comprehensive income | 127 | 11 | 195 | 144 |
| Comprehensive income (loss) | 190 | (721) | (34) | (2,432) |
In the third quarter of 2025, the Bank recorded net income of $63 million, its first quarterly net income since 2022. This net income was driven by a decline in interest expense as the balance sheet continues to normalize and investments mature. For the nine months ended September 30, 2025, the Bank reported a net loss of $229 million, primarily due to net interest income being lower than operating expenses. The cumulative losses do not affect the Bank’s ability to carry out its mandate.
Interest revenue depends on market conditions, the impact of those conditions on the interest-bearing assets held on the Bank’s balance sheet, and the volume and blend of these assets. The Bank earns interest on its investments in Government of Canada securities, on securities purchased under resale agreements and on assets acquired through large-scale asset purchase programs. In the third quarter and the first nine months of 2025, interest revenue decreased by $148 million (or 15%) and $252 million (or 9%), respectively, compared with the same periods in 2024. These declines were mainly the result of the Bank’s lower average holdings of interest-yielding investments throughout the periods. This was partially offset by a slight increase in the average yield on the investment portfolio and the restart of the term repo program in March 2025.
Interest expense consists mainly of interest incurred on deposits held by the Bank. During the third quarter and the first nine months of 2025, the interest expense decreased by $945 million (or 62%) and $2,613 million (or 55%), respectively, compared with the same periods in 2024. This decrease was driven by a decline in average deposits and a reduction in interest rates.
Operating expenses for the third quarter and first nine months of 2025 increased by $4 million (or 2%) and $19 million (or 4%), respectively, compared with the same periods in 2024. This reflects increases in costs for bank note research, production and processing as well as premises costs. These increases were offset mainly by lower costs for technology and telecommunications.
- Bank note research, production and processing costs increased by $16 million and $28 million in the third quarter and the first nine months of 2025, respectively, compared with the same periods in 2024. This increase is due primarily to a production run in 2025. The timing of bank note production varies from one year to the next based on the annual production plan and market needs.
- Premises costs decreased by $3 million in the third quarter of 2025 but increased by $3 million in the first nine months of the year, compared with the same periods in 2024. This fluctuation was due to the timing of repairs and maintenance work.
- Technology and telecommunications costs decreased by $5 million and $6 million in the third quarter and first nine months of 2025, respectively, compared with the same periods in 2024. The decreases reflect lower costs for technology consulting and advisory services.
For the nine months ended September 30, 2025, other comprehensive income increased by $51 million compared with the same period in 2024. This increase was driven primarily by a higher gain in the fair value of the Bank’s investment in the Bank for International Settlements and higher remeasurement gains on the Bank’s defined-benefit plans. The remeasurement gains were due to increases in both the fair value of the plans’ assets and the discount rates in 2025 compared with 2024.1
Looking ahead through 2025
| The Bank’s 2025 Plan (in millions of Canadian dollars) |
||||
|---|---|---|---|---|
| 2025 budget | 2025 forecast | |||
| For the year ended December 31 | $ | % | $ | % |
| Staff costs | 431 | 55 | 435 | 57 |
| Bank note research, production and processing | 39 | 5 | 37 | 5 |
| Premises costs | 36 | 5 | 42 | 5 |
| Technology and telecommunications | 131 | 16 | 122 | 16 |
| Depreciation and amortization | 72 | 9 | 76 | 10 |
| Other operating expenses | 78 | 10 | 55 | 7 |
| Total expenditures | 787 | 100 | 767 | 100 |
This is the first year of the Bank’s 2025–27 strategic plan, Canadians Count on Us. The Bank’s financial management framework supports informed decisions about allocating resources. The framework is aimed at achieving the Bank’s objectives while prudently managing fiscal risks.2
The 2025 forecast of $767 million is $20 million lower than indicated in the 2025 budget. The decrease is due to reduced costs for technology contracts. It also reflects a decline in defined benefit costs resulting from an increase in the discount rate used to calculate the expense.
Staff costs remains the largest portion of the Bank’s expenditures. Production costs for bank notes are based on the anticipated volume of new notes required in 2025. Other expenditures include the cost to fulfill the Bank’s core functions, modernize systems and tools to support operations, manage risk, sustain the Bank’s resilience posture and prepare for the future.
Operational highlights and changes
Governing Council and Board of Directors
No changes were made to the membership of the Governing Council or Board of Directors during the quarter.
Operations and programs
On July 30, 2025, the Bank announced that it was maintaining its policy rate at 2.75%. On September 17, 2025, it decreased the policy rate by 25 basis-points to 2.50%, and on October 29, 2025, it announced a further 25-basis-point decrease to 2.25%.
Risk analysis
The Bank’s financial risks are discussed in the notes to the financial statements of December 31, 2024. Note 4 of the condensed interim financial statements for September 30, 2025, also provides an update on these financial risks.
Condensed interim financial statements
- 1. The net defined-benefit obligations are measured using the discount rate in effect at the period-end. The rate applicable to the defined-benefit obligations as at September 30, 2025, was a range of 4.2% to 5.1% (4.2% to 4.8% as at December 31, 2024). See Note 9 in the condensed interim financial statements for more information.[←]
- 2. The Bank’s forecasts for its operations do not include projections of net income and financial position. Such projections would require assumptions about interest rates, which could be interpreted as a signal of future monetary policy.[←]