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Business In Ireland 2014

Financial Sector

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In this chapter, statistics on the Financial sector are presented. The statistics were not collected via the structural business surveys mentioned throughout this publication, but were collected and analysed by the CSO Balance of Payments Division who engage directly with the Financial sector and its regulators on the provision of these statistics.

The Financial and Insurances Activities sector, NACE K, has traditionally used different terms to describe variables like production value, gross value added and operating surplus. As part of a broad legislative proposal, agreed EU definitions for the Financial and Insurance sectors are currently being developed and should be in use in the coming years. The objective behind producing these Financial sector statistics is to complete the coverage of the business economy in Ireland and to allow meaningful comparisions with other business sectors such as Industry and Services.

Financial and Insurance activities

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The Financial sector is described by NACE Section K. It includes:

K64 – Financial Service Activities except Insurance and Pension Funding.

K65 – Insurance, Reinsurance and Pension Funding.

K66 – Activities Auxiliary to Financial Services and Insurance Activities.

K64 is dominated by credit institutions which in Ireland are banks and credit unions. However, it also includes activities of holding companies, investment funds and other financial services activities.

K65 includes life insurance companies, non-life insurance companies and reinsurance companies as well as pension funds.

K66 is the most diverse category and includes all financial auxiliaries including brokerage firms, insurance agents and fund management activities.

The business operations data presented for the Financial sector in this report covers banks, life insurance, non-life insurance and reinsurance. The detailed calculations of the main indicators for these enterprises are presented here. The calculations are based on an accounting framework where the income and expenses for the reference year 2014 are analysed in detail. See Tables 8.1 and 8.2.

	Interest payable linked to securities	Interest payable linked to loans and deposits	Interest receivable from securities	Interest receivable from loans and deposits
2012	-3.193	-9.82	5.968	12.176
2013	-2.484	-6.667	4.072	9.067
2014	-2.053	-4.338	3.316	7.738

Interest received and interest paid decreased over the period 2012 to 2014 when the ECB reduced their rates.
The net interest income from securities decreased over the period while the net interest received from loans and deposits increased.
Both Production Value and Personnel costs decreased from 2012 to 2013, followed by increases in 2014.
Gross Operating Surplus remained stable over the three years 2012 to 2014.

	Profit linked to loans and deposits	Profit linked to securities	Other Income	Value of Production
2012	2.356	2.775	3.25	8.381
2013	2.4	1.588	3.513	7.501
2014	3.4	1.263	3.687	8.35

	Gross premiums earned	Gross claims incurred
2012	41.695111576	37.716398853
2013	44.83557541236	34.82626283908
2014	47.07836807637	34.83621732805

Gross Premiums earned increased almost 12.9% between 2012 and 2014, while Gross Claims incurred fell 7.6% in the same period.
Fees Receivable increased by 5.8% in 2013 and by 5.1% in 2014.
Investment Income on Insurance Reserves (Technical a/c) decreased 6.9% between 2012 and 2014.
Production for all Insurance companies amounted to €13.4bn in 2014, an increase of €1.4bn or 11.5% on the previous year.
Gross Operating Surplus (or profit) for Insurance companies was over €3.1bn in 2014, an increase of €1.3bn or almost 75% on 2013 levels.

8.1 Production account and generation of income for all banks, 2012 - 2014

8.2 Production account and generation of income for all insurance companies, 2012 - 2014

Table 8.3 Summary of main indicators for banks and insurance, 2014
			€m
	Banks	Insurance	Total
Turnover	8,350	47,078	55,428
Production value	8,350	13,419	21,769
Gross value added	5,165	3,920	9,085
of which
Gross operating surplus	2,955	3,143	6,098
Personnel costs	2,209	777	2,986
Source: CSO/Central Bank survey of credit institutions and CSO Balance of Payments surveys of insurance corporations

Open in Excel: Business in Ireland 2014 Table 8.3 (XLS 25KB)

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Table 8.1 Production account and generation of income for all banks, 2012 - 2014
	2012	2013	2014
	€m	€m	€m
All interest receivable	18,144	13,139	11,053
Interest receivable from securities	5,968	4,072	3,316
Interest receivable from loans and deposits	12,176	9,067	7,738
Commissions receivable	2,057	1,962	2,013
Other operating income	1,194	1,551	1,674
All Income	21,395	16,652	14,741
All Interest payable and similar charges	13,014	9,151	6,391
Interest payable linked to securities	3,193	2,484	2,053
Interest payable linked to loans and deposits	9,820	6,667	4,338
Production value¹ excluding value adjustments and profits from affiliates	8,381	7,501	8,350
Interest Margin²	5,130	3,989	4,662
Commissions payable	486	420	395
Other administrative expenses (other than labour costs)	493	557	633
Other operating charges	1,838	1,712	2,157
Gross value added at factor cost³	5,566	4,811	5,165
Personnel costs	2,738	1,975	2,209
Gross operating surplus⁴	2,828	2,835	2,955
Source: CSO/Central Bank survey of credit institutions
¹ All income less all interest payable and similar charges.
² All interest received less all interest payable and similar charges.
³Production value less commissions payable, other administrative expenses (other than labour costs) and other operating expenses.
⁴Gross value added less personnel costs.

Table 8.2 Production account and generation of income for all insurance companies, 2012 - 2014
	2012¹	2013	2014
	€m	€m	€m
Gross premiums earned	41,695	44,836	47,078
Portfolio investment income	3,899	3,637	3,525
Investment income (Technical a/c)	3,395	3,256	3,158
Investment income (Non-Technical a/c)	503	381	366
Other services produced	1,651	2,114	1,652
Fees receivable (commissions etc)	1,046	1,107	1,164
Other income - Technical a/c	604	1,007	488
Gross claims incurred	37,716	34,826	34,836
Gross claims payments	37,644	34,997	35,272
Gross change in the provision for outstanding claims	73	-171	-436
Capital gains and provisions	2,959	-3,726	-4,000
Capital gains/losses realised and unrealised	11,664	8,039	16,008
Gross change in life insurance provision	-8,705	-11,765	-20,008
Production value²	12,487	12,034	13,419
Gross value of reinsurance services received	2,304	2,909	3,092
Other intermediate consumption	6,798	6,608	6,407
Gross value added at factor cost³	3,384	2,516	3,920
Personnel Costs	711	719	777
Gross operating surplus⁴	2,673	1,797	3,143
Source: CSO Balance of Payments surveys of insurance corporations
¹Figures for 2012 revised.
²Includes gross premium earned, portfolio investment income, other services produced, capital gains and provisions less gross claims incurred.
³Production value less gross value of reinsurance services received and other intermediate consumption.
⁴Gross value added at factor cost less personnel costs.

Business In Ireland 2014

Financial Sector

Financial Sector

Financial and Insurance activities

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