The Deutsche Bundesbank reported a loss of €8.6 billion for 2025, a significant improvement from the previous year’s larger deficit. However, the central bank will once again forgo a dividend payment to the German federal government.
Germany’s central bank recorded a loss for the second consecutive year, posting a deficit of approximately €8.6 billion for 2025. This marks the second-highest loss in the Deutsche Bundesbank’s history, the institution announced in Frankfurt. A dividend transfer from Frankfurt to the federal government will not occur for the sixth year in a row.
The loss, however, more than halved compared to the record deficit of over €19 billion in 2024.
“While we continue to face financial burdens, they are easing,” said Bundesbank President Joachim Nagel in Frankfurt. He indicated that this positive trend is expected to continue. Nevertheless, the Bundesbank “will again report a loss for the year” in the current period.
The Bundesbank is carrying the multi-billion euro losses on its balance sheet, a consequence of monetary policy within the Eurozone. The balance sheet loss, resulting from the loss carryforward and the current year’s deficit, amounts to €27.8 billion.
Nagel emphasized that the Bundesbank’s burdens are temporary. “Future annual surpluses will be used to reduce the accumulated balance sheet loss from our own resources and to build up the necessary risk provisioning.” He added that the Bundesbank can fully fulfill its tasks even with a balance sheet loss, as it maintains a solid balance sheet.
Nagel had already warned at last year’s balance sheet presentation that dividend payments to the federal government were unlikely in the foreseeable future. In 2023, the Bundesbank narrowly avoided reporting a loss – but only because it was able to offset the burdens of the interest rate turnaround with billions in reserves.
Last Bundesbank Dividend for the Federal Government Seven Years Ago
For years, the German Finance Ministry had planned for a Bundesbank profit of €2.5 billion in the federal budget. In 2019, then-Minister Olaf Scholz (SPD) celebrated the highest amount since the financial crisis: €5.85 billion. It was the last financial windfall from Frankfurt to date.
The primary goal of central banks is not to generate profits. The European Central Bank (ECB) and, with it, the national central banks in the Eurosystem are primarily responsible for price stability and, a stable currency in the Eurozone.
However, monetary policy also has consequences for the balance sheets of central banks: Starting in the summer of 2022, the ECB rapidly increased interest rates in the Eurozone to curb the then-high inflation. Higher interest rates in the financial markets led to increased interest expenses for central banks on funds parked with them by commercial banks.
In other words that interest income for central banks is not keeping pace: Many long-term securities, such as government and corporate bonds, which the Euro-central banks purchased on a large scale as part of their monetary policy over the years, yield comparatively low interest rates.
Inflation has since fallen from record highs, prompting the ECB to lower interest rates in the Eurozone again. The key interest rate for banks and savers is now 2.0 percent.
Despite this, the ECB also reported a loss of approximately €1.25 billion for 2025. A profit distribution to the national central banks in the Eurozone, including the Bundesbank, will not occur again. In 2024, the ECB recorded its highest loss in history, totaling more than €7.9 billion.
The ECB expects to return to profitability in 2026 or 2027. However, it may take years before the national central banks in the Eurozone benefit from distributions again: The accumulated loss of around €10.5 billion is carried on the ECB’s balance sheet until it is offset by future profits.
dpa/ll/jra
