(Bloomberg) -- The Dutch central bank reported a nearly eightfold increase in its loss as interest-rates hikes hit its balance sheet.

The loss rose to €3.5 billion ($3.8 billion) in 2023, from a loss of €460 million in the previous year, De Nederlandse Bank, or DNB, said in a report published on Friday. 

“As interest rates were raised, our interest expense went up, whereas interest income barely increased,” the DNB said. 

While the monetary authority has to pay higher interest for deposits of commercial lenders, its income from government bond holdings — which increased substantially under the European Central Bank’s purchase programs — won’t rise accordingly.

Last year, the Dutch central bank warned of possible annual losses until 2028 as monetary tightening impacts its balance sheet.

Since the introduction of the euro in 1999, the Dutch central bank has made a total profit of €22.6 billion. It paid out €16.2 billion in the form of dividends to the Dutch state, using the remaining €6.3 billion to strengthen its buffers. 

Its buffers now stand at around €7 billion after two consecutive years of negative results.

©2024 Bloomberg L.P.