For the period ended March 31, 2026, unaudited
Context of 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 May 20, 2026.
This Quarterly Financial Report should be read in conjunction with the condensed interim financial statements for the first quarter of 2026 included in this publication and with the Bank’s Annual Report 2025. Disclosures and information in the Annual Report apply to the current quarter unless otherwise updated in this quarterly report.
Overview
During the first quarter of 2026, the Bank maintained asset purchases through regular term and overnight repo operations, along with purchases of Government of Canada treasury bills, ensuring a balanced mix of assets. Deposit balances declined in line with the maturing investments.
The Bank recorded net income of $181 million for the three-month period ended March 31, 2026. In accordance with section 27 of the Bank of Canada Act, net income, less any allocation to reserves, is considered ascertained surplus (surplus) and is remitted to the Receiver General for Canada. However, pursuant to the Budget Implementation Act, 2023, No. 1, any surplus is first required to be applied to reduce the Bank’s accumulated deficit. Accordingly, no remittances were made to the Receiver General for Canada for the period, as the surplus was applied against the accumulated deficit.
Refer to the Bank’s website for more information, including the relevant press releases and market notices. Details on the composition of the balance sheet are published in the Bank’s monthly Assets and Liabilities publication.
Balance sheet
| Condensed financial position—Assets (in millions of Canadian dollars) |
|||
|---|---|---|---|
| As at | March 31, 2026 | December 31, 2025 | $ Change |
| Assets | |||
| Loans and receivables | 32,754 | 27,803 | 4,951 |
| Investments | 175,373 | 192,215 | (16,842) |
| Derivatives—indemnity agreements with the Government of Canada | 19,152 | 19,291 | (139) |
| All other assets* | 1,262 | 1,213 | 49 |
| Total assets | 228,541 | 240,522 | (11,981) |
* All other assets includes Cash and foreign deposits, Capital assets and Other assets.
Overview of assets
The Bank’s financial assets reflect its unique role as the sole issuer of Canadian bank notes and its operations to support monetary policy and the financial system. Total assets decreased 5.0% from December 31, 2025, mainly due to the maturity of investments, partially offset by an increase in loans and receivables, specifically overnight repos.
Loans and receivables increased mainly due to higher balances of overnight repos, partially offset by lower term repos. These operations support the effective implementation of monetary policy.
Investments decreased by 8.8% compared with December 31, 2025, to $175,373 million as at March 31, 2026. The decrease was primarily due to a $19,892 million reduction in Government of Canada securities reflecting bond maturities. This was partially offset by a $2,951 million increase in Government of Canada treasury bills.
Derivatives—indemnity agreements with the Government of Canada are agreements that indemnify the Bank. Under these agreements, losses on asset sales within the Government of Canada Bond Purchase Programs and the Provincial Bond Purchase Program are indemnified by the Government of Canada, while any gains on disposal are remitted to the government. The derivatives value decreased during the quarter, mainly due to reduced holdings.
| Condensed financial position—liabilities and deficiency (in millions of Canadian dollars) |
|||
|---|---|---|---|
| As at | March 31, 2026 | December 31, 2025 | $ Change |
| Liabilities and deficiency | |||
| Bank notes in circulation | 121,147 | 124,319 | (3,172) |
| Deposits | 115,388 | 124,438 | (9,050) |
| Other liabilities | 256 | 287 | (31) |
| Deficiency | (8,250) | (8,522) | 272 |
| Total liabilities and deficiency | 228,541 | 240,522 | (11,981) |
Overview of liabilities and deficiency
The Bank’s liabilities reflect its mandate as Canada’s sole issuer of bank notes and settlement balances. As of March 31, 2026, total liabilities decreased by 4.9% compared with December 31, 2025.
Bank notes in circulation represent approximately half of the Bank’s total liabilities. Bank notes in circulation decreased by 2.6% during the three-month period to $121,147 million as at March 31, 2026, mainly due to market demand during the first quarter of the year.
Deposits made by the Government of Canada, members of Payments Canada and others decreased by 7.3%, compared with December 31, 2025, consistent with a decline in the investment balances as they matured. Government of Canada deposit balances fluctuate based on the government’s cash requirements. The deposits held for the members of Payments Canada represent the daily level of settlement balances required to support the smooth operation of the Canadian payments system.
Deficiency reflects the Bank’s accumulated deficit, which largely resulted from losses incurred in prior periods, when the interest expense on deposits exceeded the interest income on investments. The Bank has resumed normal balance sheet management and returned to quarterly profitability. As at March 31, 2026, the deficiency decreased to $8,250 million, driven by comprehensive income of $272 million in its first quarter. The accumulated deficit does not affect the Bank’s ability to fulfill its mandate. When the Bank eventually returns to an accumulated surplus position, remittance to the Receiver General for Canada will resume in accordance with legislation. 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 March 31 | 2026 | 2025 | $ Change | |
| Interest revenue | 805 | 816 | (11) | |
| Interest expense | (437) | (897) | 460 | |
| Net interest income (expense) | 368 | (81) | 449 | |
| Other revenue | 5 | 4 | 1 | |
| Total income (loss) before operating expenditures | 373 | (77) | 450 | |
| Total operating expenditures | (192) | (181) | 11 | |
| Net income (loss) | 181 | (258) | 439 | |
| Other comprehensive income | 91 | - | 91 | |
| Comprehensive income (loss) | 272 | (258) | 530 | |
The Bank reported net income of $181 million for the three-month period ended March 31, 2026, an improvement over the same quarter in the prior year where the bank incurred a loss of $258 million. Interest revenue exceeded interest expense and total operating expenditures, primarily due to lower interest expense associated with lower deposit balances as the balance sheet normalized. Although the Bank generated net income for the period, no remittances were made to the Receiver General for Canada. The Bank’s net income for the first quarter of 2026 is being retained to reduce the accumulated deficit incurred in prior periods.
Interest revenue decreased by 1.3% compared with the same period in 2025, due to the Bank’s lower average holding of interest-yielding investments as the Bank normalized its balance sheet, offset by a higher volume of the overnight repo operations. 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.
Interest expense consists mainly of interest incurred on deposits held by the Bank. During the first quarter of 2026, the interest expense decreased by 51.3% compared with the same period in 2025, resulting from lower average deposits by members of Payments Canada and a decrease in the policy interest rates.
Operating expenditures for the first quarter of 2026 increased by 6.1% compared with the same period in 2025, primarily reflecting the timing of non-recurring expenditures related to the Bank’s cost reduction initiative. The related ongoing savings are expected to materialize later in the year. This increase was partially offset by lower salaries and employee benefits.
Other comprehensive income for the first quarter of 2026 was $91 million ($nil for the same period in 2025). It includes a remeasurement gain of $66 million on the Bank’s defined-benefit plans, mainly due to an increase in the fair value of the plan assets and an increase in the discount rates.1 It also included a $25 million increase in the fair value of the Bank’s investment in the Bank for International Settlements.
Looking ahead through 2026
| The Bank’s 2026 plan (in millions of Canadian dollars) |
||
|---|---|---|
| 2026 budget | ||
| For the year ended December 31 | $ | % |
| Staff costs | 430 | 53 |
| Bank note production | 62 | 8 |
| Premises costs | 35 | 4 |
| Technology and telecommunications | 119 | 15 |
| Depreciation and amortization | 69 | 8 |
| Other operating expenditures | 101 | 12 |
| Total operating expenditures | 816 | 100 |
This is the second year of the Bank’s 2025–27 strategic plan, Canadians Count on Us. The Bank’s financial management objective is to steward public funds responsibly in support of its mandate, with strong governance, transparency and disciplined use of resources.2
The Bank has committed to reducing its core operating expenditures by 15% by the end of 2028, in line with the federal government’s Comprehensive Expenditure Review. These reductions began to take effect in 2026, with initial cost-saving measures and efficiencies.
The Bank’s expenditures profile remains largely consistent by category year over year, with the exception of bank note production costs, which are driven by market demand.
Operational highlights and changes
Governing Council and Board of Directors
On March 23, 2026, the Bank announced that Deputy Governor Rhys Mendes will leave the Bank on April 10, 2026. The Bank also announced the retirement of Deputy Governor Sharon Kozicki on July 15, 2026.
On April 20, 2026, the Bank announced the appointment of Marc-André Gosselin and Nicolas Vincent as Deputy Governors, effective May 25 and August 3, 2026, respectively.
Operations and programs
On January 28, 2026, March 18, 2026 and again on April 29, 2026, the Bank announced that it was maintaining its policy rate at 2.25%.
Risk analysis
The Bank’s financial risks are discussed in the notes to the financial statements of December 31, 2025. Note 4 of the condensed interim financial statements for March 31, 2026, 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 as at the period-end. The rate applicable to the defined-benefit obligations for the pension benefit plans as at March 31, 2026, was 5.2% (5.0% as at December 31, 2025). See Note 9 in 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.[←]