Financial results


This section provides the key highlights of the Bank’s financial results for the year ended December 31, 2022. These highlights should be read with the financial statements and accompanying notes for the year ended December 31, 2022. Management is responsible for the information presented in the Annual Report.

Supporting the economy and the financial system

To fulfill its mandate, the Bank has access to several tools to support the Canadian economy and financial system. When key financial markets became strained in March 2020, the Bank responded by introducing several programs to provide liquidity and maintain market functioning. As markets gradually improved, most facilities and operations were suspended, discontinued or scaled back. This led in 2021 to ending quantitative easing and moving into a reinvestment phase. In 2022, the Bank stopped reinvestment and began quantitative tightening. Refer to the Bank’s website for the relevant press releases and market notices and more information on these measures.

Managing the balance sheet

Financial position
(in millions of Canadian dollars)
As at December 31 2022  2021
Loans and receivables 23,424
Investments 378,206  468,656
Derivatives—indemnity agreements with the Government of Canada 31,346  6,394
All other assets* 1,153  891
Total assets 410,710  499,365
Liabilities and equity (deficiency)
Bank notes in circulation 119,726  115,155
Deposits 273,333  347,034
Securities sold under repurchase agreements 17,396  35,560
Other liabilities 352  1,008
Equity (deficiency) (97) 608
Total liabilities and equity (deficiency) 410,710  499,365

* All other assets includes Cash and foreign deposits, Capital assets and Other assets.

The Bank’s holdings of financial assets are typically related to its role as the exclusive issuer of Canadian bank notes. However, the higher levels of assets in recent years result largely from activities undertaken as part of the Bank’s monetary policy and financial system functions. The value of the assets on the Bank’s balance sheet peaked in the first quarter of 2021. It has since decreased as market conditions have improved. In April 2022, the Bank moved from a reinvestment phase into quantitative tightening, where maturing Government of Canada bonds are no longer replaced; as a result, the size of the balance sheet is declining over time. The Bank’s total assets decreased by 18% during the year to $410,710 million as at December 31, 2022. The main driver of this was the maturity of investments and loans and receivables. The decrease was partially offset by an increase in the value of the Bank’s indemnity agreements with the Government of Canada.

Loans and receivables is typically composed primarily of securities purchased under resale agreements (SPRAs), which include overnight repo operations and term repo operations. SPRAs are high-quality assets acquired through the securities repurchase (repo) market, in line with the Bank’s framework for market operations and liquidity provision. Normally, the Bank carries out term repo operations to manage its balance sheet and offset seasonal fluctuations in the demand for bank notes. The Bank temporarily increased the scale of these operations in March 2020 with the aim of promoting the orderly functioning of Canadian financial markets. Over time, the demand for the program steadily declined, leading to its suspension in 2021. All SPRAs matured in 2022.

Investments decreased by 19% to $378,206 million as at December 31, 2022. This decrease was driven mainly by the following movements within the Bank’s holdings:

  • Government of Canada securities, which include nominal bonds and real return bonds, decreased by $64,070 million during 2022. Much of this decrease involved a decline of $47,662 million in Government of Canada bonds held at fair value. The balance of these bonds declined as bonds matured and long-term bond yields increased. During the same period, Government of Canada bonds held at amortized cost decreased by $16,408 million, mainly due to bonds maturing. The Bank’s remaining treasury bills also matured during the year, resulting in a decrease of $1,331 million.
  • The Bank engages in repo operations, which provide a temporary source of Government of Canada securities on an overnight basis to market participants. These operations also improve the availability of the Bank’s holdings of Government of Canada securities. The volume of securities repo operations declined during 2022, resulting in a decrease of $17,974 million in securities lent or sold under repurchase agreements compared with December 31, 2021.

Derivatives—indemnity agreements with the Government of Canada refers to the indemnity agreements that were put in place to indemnify the Bank and allow it to support Government of Canada, provincial and corporate bond markets. Losses resulting from the sale of assets within the Government of Canada Bond Purchase Program, the Provincial Bond Purchase Program and the Corporate Bond Purchase Program are indemnified by the Government of Canada, whereas gains on disposal are remitted to the government. The $31,346 million balance represents the fair value of the derivatives associated with the net unrealized losses on these assets as at December 31, 2022. Derivatives increased by $24,952 million during the year because long-term bond yields rose. This is represented in the asset profile chart by “All other assets.”

Bank notes in circulation represents approximately 29% (23% as at December 31, 2021) of the Bank’s total liabilities. Bank notes in circulation increased by 4% to $119,726 million as at December 31, 2022, mainly reflecting an increase in demand during the year.

Deposits consists of deposits made by the Government of Canada, members of Payments Canada and others. Although deposits were previously maintained at a lower level, they now represent the largest liability on the Bank’s balance sheet. This balance has declined by 21% to $273,333 million as at December 31, 2022, compared with December 31, 2021, reflecting the start of quantitative tightening in April 2022.

Securities sold under repurchase agreements decreased by 51% to $17,396 million as at December 31, 2022, compared with December 31, 2021. This liability represents the repurchase price for securities repo operations and overnight reverse repo operations. The Securities Repo Operations program supports core funding markets and the proper functioning of the Government of Canada securities market. Overnight reverse repos help to effectively implement monetary policy by withdrawing intraday liquidity, complementing the standing deposit and lending facilities.

Equity turned negative during the fourth quarter of 2022, primarily as a result of net losses of $1,111 million, and sits at a deficiency of $97 million as at December 31, 2022. The net losses—after drawing down the statutory reserve of $25 million—are recorded as an accumulated deficit. Equity also includes $5 million of authorized share capital, a special reserve of $100 million, an actuarial gains reserve of $444 million and an investment revaluation reserve of $440 million. Refer to Note 14 in the financial statements for more information about the Bank’s equity.

Results of operations

Results of operations
(in millions of Canadian dollars)
For the year ended December 31  2022   2021  
Interest revenue 4,373  4,022 
Interest expense (4,786) (923)
Net interest revenue (expense) (413) 3,099 
Dividend revenue
Other revenue
Total income (loss) before operating expenses (399) 3,115 
Total operating expenses (712) (714)
Net income (loss) (1,111) 2,401 
Other comprehensive income 406  409 
Comprehensive income (loss) (705) 2,810 

In 2022, after a period of higher-than-average income, the Bank incurred a net interest expense. This does not affect the Bank’s ability to conduct monetary policy or its operations. The Bank incurred a net loss in 2022 because the interest incurred on deposits was greater than the interest earned on assets. The interest expense on deposits was higher in 2022 because the Bank increased its policy rate from 0.25% to 4.25%. In time, the Bank will return to a net income position.

Interest revenue depends on market conditions, their impact 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 SPRAs and on assets resulting from the large-scale asset purchase programs. In 2022, interest revenue increased by $351 million (or 9%) over 2021. This increase was driven by higher yields and a higher average holding of interest-yielding investments by the Bank throughout the year.

Interest expense consists mainly of interest incurred on deposits held by the Bank. During the year, as a result of rises in the Bank’s policy interest rate, interest expense quintupled. This resulted in an increase of $3,863 million compared with the same period in 2021. The increase was partially offset by a lower average volume of deposits during the year and by a decrease in the interest rate paid on Government of Canada deposits to 0% in May 2022.

Operating expenses in 2022 decreased by $2 million compared with 2021. This primarily reflects a decrease in bank note research, production and processing costs, offset by increases in costs for staff and technology and telecommunications.

  • Bank note research, production and processing expenses decreased by $32 million (or 39%) during the year compared with 2021. This decrease was driven by lower volumes of bank notes being printed. The timing of bank note production varies from one year to the next based on the annual production plan and market demand.
  • Staff costs increased by $15 million (or 4%) during the year, compared with 2021, as a result of the following changes:
    • Salary costs increased by $23 million (or 10%) due to new positions being filled for strategic initiatives as well as the annual compensation adjustment.
    • Benefits and other staff costs decreased by $8 million (or 5%), mainly due to the expense associated with the Bank’s defined-benefit plans. This expense declined by $14 million (or 11%) as a result of a rise in the discount rates used for their calculation.1
  • Technology and telecommunications costs increased by $9 million (or 9%) compared with 2021. This increase was driven by the Bank’s focus on its digital transformation and on strengthening its information technology systems.

Other comprehensive income for the year was $406 million. It consists of remeasurement gains of $401 million on the Bank’s defined-benefit plans as a result of increases in discount rates,2 offset by a decrease in the fair value of the plans’ assets. It also consists of a $5 million increase in the fair value of the Bank’s investment in the Bank for International Settlements.

Looking ahead through 2023

The Bank’s 2023 plan
(in millions of Canadian dollars)
2022 budget 2022 actuals 2023 budget
For the year ended December 31 $ % % $ %
Staff costs 407 53 378 53 419 52
Bank note research, production and processing 55 7 51 7 60 7
Premises costs 35 5 35 5 35 4
Technology and telecommunications 101 13 104 15 118 15
Depreciation and amortization 71 9 75 10 78 10
Other operating expenses 97 13 69 10 96 12
Total operating expenses 766 100 712 100 806 100

The Bank’s financial management framework supports strategic planning. It enables decisions for allocating resources to achieve the Bank’s objectives, mitigate risks and invest in the Bank’s people and tools in a prudent fiscal manner.3 The year 2022 was the first year of the Bank’s 2022–24 strategic plan, Delivering on Our Promise.

Staff costs represents the largest portion of the Bank’s expenditures. Other expenditures include the cost of enhancing systems and tools to support operations to sustain the Bank’s resilience posture and prepare for the future, as well as supporting the Bank’s new mandates, continuing the Bank’s digital transformation and reducing the Bank’s risk. In 2022, the Bank did not spend its full budget, mainly due to slower-than-planned recruitment, the timing of other operating expenses and lower-than-planned benefits costs resulting from a change in the discount rate.

Accounting and control matters

For details of the Bank’s financial reporting framework and accounting matters, refer to the accompanying annual financial statements.

Internal control over financial reporting

The Bank maintains a framework to evaluate the design and effectiveness of internal controls over financial reporting. This framework includes disclosure controls and procedures to provide reasonable assurance about the reliability of financial reporting and the preparation of the financial statements in accordance with International Financial Reporting Standards. Every year, the Bank certifies its internal controls over financial reporting. This process is based on the Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and on the Control Objectives for Information and Related Technologies framework.

Risk analysis

The Risk management section provides an overview of the Bank’s 2022 risk management activities and achievements. It also reviews in detail the key areas of risk—strategic, operational, financial, and environment- and climate-related. The financial risks are discussed further in the notes to the December 31, 2022, financial statements. The pandemic has heightened the Bank’s exposure to financial risks.

Climate change

Management has considered the impact of climate change, especially in the context of the disclosures included in the Annual Report. In 2023, the Bank will publish a stand-alone disclosure of climate-related risks in accordance with guidance published by the Task Force on Climate-related Financial Disclosures. The Bank will continue monitoring the evolving financial reporting standards for climate-related disclosures.

  1. 1. Benefit costs for a given period are based on the discount rate as at December 31 of the preceding year (e.g., the rate at December 31, 2021, was used to calculate the benefit expenses for 2022). Discount rates and related benefit costs share an inverse relationship: as rates decrease, benefit expenses increase (and vice versa). The discount rates used to calculate the pension benefit plans and other benefit plan expenses ranged from 1.9% to 2.7% for 2021 and from 2.6% to 3.1% for 2022. This increase resulted in decreased benefit costs for 2022, all else being equal.[]
  2. 2. The net defined-benefit liabilities are measured using the discount rate in effect as at the period-end. The rate applicable to the net defined-benefit liabilities as at December 31, 2022, ranged from 5.0% to 5.1% (a range of 2.6% to 3.1% as at December 31, 2021). See Note 12 in the financial statements for more information.[]
  3. 3. 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.[]

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