lv

Riga, 8 April 2009

The auditors have audited the financial statements of the Bank of Latvia for the year ended 31 December 2008, approved by the Board of the Bank of Latvia; they are available on the Bank of Latvia's website at www.bank.lv. When the Council of the Bank of Latvia has approved the complete Annual Report, it will be available in the "Publications" section of the website on 21 April 2009.

The financial statements of the Bank of Latvia for 2008 were audited by independent auditors: the Audit Commission comprising experts of the auditing company KPMG Baltics SIA and the State Audit Office of the Republic of Latvia. According to the Commission's opinion, the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with the law "On the Bank of Latvia" and the "Financial Accounting Policy of the Bank of Latvia" approved by the Bank of Latvia's Council. 

The Bank of Latvia's profit earned in 2008 was 53 437 thousand lats. A notable share of the Bank of Latvia's income was on account of net interest income in the amount of 84.5 million lats, mostly resulting from income from investing foreign currency reserves in sound and highly liquid financial instruments and from the realised gains from investment in the above financial instruments: last year they amounted to 34.9 million lats. The negative developments on the global financial market and the related fall in the market value of some financial instruments had a decreasing effect on income. 

If the Council of the Bank of Latvia approves the Annual Report with the above result, pursuant to the law "On the Bank of Latvia" the profit will be allocated as follows:
- 16 031 thousand lats will be transferred to the state budget;
- 37 406 thousand lats will be transferred to the reserve capital of the Bank of Latvia. 

The Law "On the Bank of Latvia" establishes that a part of the Bank of Latvia's profit of the reporting year, calculated by applying the same percentage as the tax rate set for residents of Latvia by the Law "On Corporate Income Tax", together with a payment in the amount of 15% of the profit of the reporting year for the usage of state capital shall be transferred to the state budget. At the end of 2008 and 2007, the corporate income tax rate applicable to residents of Latvia was 15%. Therefore, 30% of the Bank of Latvia's profit of the reporting year shall be transferred to the state budget within 15 days following the approval of the annual report by the Council of the Bank of Latvia. The Bank of Latvia's profit remaining after making the above deductions shall be transferred to the reserve capital. The reserve capital shall be formed to cover potential losses.