Financial results


This section provides the key highlights of the Bank of Canada’s financial results for the year ended December 31, 2023. These highlights should be read with the financial statements and accompanying notes for the year ended December 31, 2023. Management is responsible for the information presented in the Annual Report.

Since the onset of the COVID‑19 pandemic, the Bank has used extraordinary measures to restore the proper functioning of financial markets and support the economic recovery. In response to high inflation following the reopening of the Canadian economy, the Bank rapidly raised its policy rate and undertook quantitative tightening, in which maturing bond holdings are not being replaced. Refer to the Bank’s website for more information on these measures, including the relevant press releases and market notices.

Managing the balance sheet

Financial position
(in millions of Canadian dollars)
As at December 31 2023  2022 
Loans and receivables
Investments 292,341  378,206 
Derivatives—indemnity agreements with the Government of Canada 23,406  31,346 
All other assets* 1,023  1,153 
Total assets 316,776  410,710 
Liabilities and deficiency
Bank notes in circulation 119,430  119,726 
Deposits 196,212  273,333 
Securities sold under repurchase agreements 6,638  17,396 
Other liabilities 342  352 
Deficiency (5,846) (97)
Total liabilities and deficiency 316,776  410,710 

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

The Bank’s holdings of financial assets stem from its unique role as the exclusive issuer of Canadian bank notes and its activities related to monetary policy and the financial system. The value of the assets on the Bank’s balance sheet has declined due to the Bank’s quantitative tightening measures, as a result of improved market conditions and economic performance. The Bank’s total assets decreased by 23% during the year to $316,776 million as at December 31, 2023. The main driver of this decrease was the maturity of investments.

Investments decreased by 23% to $292,341 million as at December 31, 2023. 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 $72,051 million during 2023. This decline is mainly due to the bonds maturing. This resulted in a decline of $47,914 million in Government of Canada bonds held at fair value and a decline of $24,137 million in Government of Canada bonds held at amortized cost.
  • The Bank engages in repo operations, which provide market participants with a temporary source of Government of Canada securities on an overnight basis. These operations also improve the availability of the Bank’s holdings of Government of Canada securities. The volume of securities repo operations declined during 2023, resulting in a decrease of $11,759 million in securities lent or sold under repurchase agreements, compared with December 31, 2022.

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 $23,406 million balance represents the fair value of the derivatives associated with the net unrealized losses on these assets as at December 31, 2023. Derivatives decreased by $7,940 million during the year, mainly due to a slight decline in long-term bond yields. This is represented in the asset profile chart by “All other assets.”

Bank notes in circulation represents approximately 37% (29% as at December 31, 2022) of the Bank’s total liabilities. The number of bank notes in circulation remained almost unchanged from their level on December 31, 2022.

Deposits consists of deposits made by the Government of Canada, members of Payments Canada and others. This balance has declined by 28% to $196,212 million as at December 31, 2023, compared with December 31, 2022, reflecting continued quantitative tightening.

Securities sold under repurchase agreements decreased by 62% to $6,638 million as at December 31, 2023, compared with December 31, 2022. 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.

Deficiency increased to $5,846 million as at December 31, 2023, as a result of net losses of $5,652 million for the year. As at December 31, 2023, the accumulated deficit was $6,738 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 $463 million and an actuarial gains reserve of $324 million, each as at December 31, 2023. Refer to Note 14 in the financial statements for more information about the Bank’s deficiency.

Results of operations

Results of operations
(in millions of Canadian dollars)
For the year ended December 31  2023   2022  
Interest revenue 3,850  4,373 
Interest expense (8,826) (4,786)
Net interest expense (4,976) (413)
Other revenue 14  14 
Total loss before operating expenses (4,962) (399)
Total operating expenses (690) (712)
Net loss (5,652) (1,111)
Other comprehensive income (loss) (97) 406 
Comprehensive loss (5,749) (705)

The Bank incurred a net loss of $5,652 million for the year, primarily because the interest expense incurred on deposits was greater than the interest earned on investments. The interest expense on deposits was higher because the Bank increased its policy rate from 0.25% in the first quarter of 2022 to 5.00% in the third quarter of 2023. In time, the Bank will resume generating net income. The net 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 (if any) and on assets acquired through large-scale asset purchase programs. In 2023, interest revenue decreased by $523 million (or 12%) compared with 2022. This decline was driven by the Bank’s lower average holding of interest-yielding investments throughout the year, which was partially offset by a slight increase in the average yield on investments.

Interest expense consists mainly of interest incurred on deposits held by the Bank. During the year, the interest expense increased by $4,040 million (or 84%) compared with 2022, resulting from rises in the Bank’s policy interest rate. The increase was partially offset by a lower average volume of deposits during the year and by a decrease to 0%, in effect since May 2022, in the interest paid on Government of Canada deposits.

Operating expenses in 2023 decreased by $22 million (or 3%) compared with 2022. This primarily reflects a decrease in costs for staff, offset by an increase in costs for technology, telecommunications and other operating expenses.

  • Staff costs decreased by $38 million (or 10%) during the year, compared with 2022, as a result of the following changes:
    • Salary costs increased by $20 million (or 8%) because positions were filled to deliver the Bank’s core functions, including the new function of retail payments supervision. The annual compensation adjustment also contributed to the increase.
    • Benefits and other staff costs decreased by $58 million (or 43%), mainly due to a decline in the expense associated with the Bank’s defined-benefit plans. This decline was a result of a rise in the discount rates used for their calculation.1
  • Technology and telecommunications costs increased by $7 million (or 7%) compared with 2022. This increase was driven by the Bank’s focus on its digital transformation and on strengthening the resilience of its information technology systems.
  • Other operating expenses increased by $9 million (13%) compared with 2022. This was driven primarily by an increase in expenses associated with strengthening cybersecurity and integrating digital applications, aimed at improving the Bank’s resiliency.

Other comprehensive loss for the year was $97 million. It includes a remeasurement loss of $120 million on the Bank’s defined-benefit plans as a result of a decrease in discount rates,2 offset by an increase in the fair value of the plans’ assets. It also includes a $23 million increase in the fair value of the Bank’s investment in the Bank for International Settlements.

Looking ahead through 2024

The Bank’s 2024 plan
(in millions of Canadian dollars)
2023 budget 2023 actuals 2024 budget
For the year ended December 31 $ % % $ %
Staff costs 419 52 340 49 379 54
Bank note research, production and processing 60 7 52 8 13 2
Premises costs 35 4 36 5 34 5
Technology and telecommunications 118 15 111 16 122 17
Depreciation and amortization 78 10 73 11 74 10
Other operating expenses 96 12 78 11 85 12
Total operating expenses 806 100 690 100 707 100

The year 2024 represents the last year of the Bank’s 2022–24 strategic plan, Delivering on Our Promise. The Bank’s financial management framework enables decisions about allocating resources to achieve the Bank’s objectives and mitigate risks in a prudent fiscal manner.3

Staff costs continues to represent the largest portion of the Bank’s expenditures, while production costs for bank notes are expected to decrease due to existing reserves. Other expenditures include the cost of enhancing systems and tools to support operations, sustain the Bank’s resilience posture and prepare for the future. These costs also contribute to fulfilling the Bank’s new core functions, advancing its digital transformation and mitigating risks. In 2023, the Bank did not spend its full budget, mainly due to lower-than-planned staff benefit costs resulting from a change in the discount rates and the timing of other operating expenses.

Accounting and control matters

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

  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, 2022, was used to calculate the benefit expenses for 2023). 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 2.6% to 3.1% for 2022 and from 5.0% to 5.1% for 2023. This increase resulted in decreased benefit costs for 2023.[]
  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, 2023, was 4.6% (a range of 5.0% to 5.1% as at December 31, 2022). 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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