Instituto per le Opere di Religione, or the Institute for Works of Religion, released the first annual report in its long history, which dates back to 1887.
Commonly known as the Vatican Bank, the institution had a solid 2012, though 2013 looks to be a more difficult year.
The institution chalked up an enviable profit of €86.6-million, or more than $115-million U.S.), a sharp jump from 2011’s €20.3-million.
“The increase in net profit was mainly due to favourable trading results and higher bond values, resulting from the general decrease of interest rates in the financial markets through the year,” the institution said.
Net trading income was €51.1-million last year, a turnaround from a loss in 2011 of €38.2-million.
On the asset side of its balance sheet, the bank cited cash and equivalents of €1.2-billion, and securities of €3.6-billion.
The bulk of the latter is in the form of bonds, at €3.3-billion or 92 per cent of those holdings, with equities making up just 2.6 per cent.
The report is interesting, to say the least, given that it’s the first public look at earnings and holdings. For example, the institution holds €41.3-million in gold, medals and precious coins.
It also owns a real estate company, SGIR, which is based in Rome and holds a portfolio of properties.
Like other banks, part of the outlook relates to the troubles of the euro zone.
“The euro zone recession and debt crisis is likely to keep interest rates and bond yields low for the foreseeable future and may mean negative real interest rates,” the bank said.
“This in turn raises the issue of reinvestment risk: As bonds mature, it is proving harder to find good returns at an acceptable risk, at the maturities that the IOR invests in.”
President Ernst von Freyberg also noted the expected “extraordinary expenses for the ongoing reform and remediation process.”