philip r lane : publication of the annual report 2017 introductory statement by mr philip r lane, governor of the central bank of ireland, at the media briefing on bank of ireland ’ s 2017 annual report, dublin, 9 may 2018. * * * welcome to the central bank ’ s dockland campus for this media briefing on our annual report. i am joined by deputy governor sharon donnery, deputy governor ed sibley, director general derville rowland and chief operations officer gerry quinn. 2017 was a busy year for us. the annual report, statement of accounts and our annual performance statement, which will be published later, all reflect this high level of activity. these reports are a central part of our accountability framework : our annual report sets out what we did in 2017 – and how we fulfilled our responsibilities ; our annual performance statement details our regulatory actions in 2017 – and our goals for 2018 ; and the statement of accounts – incorporated in our annual report – provide an overview of our financial operations. our accounts show the central bank is reporting a financial profit of €2. 6 billion for 2017. this means, net of retained earnings, approximately €2. 1 billion will be transferred to the exchequer. over the medium term, our headline profits will normalise, in line with the ongoing disposal of the special portfolio. looking to the future, we expect that the ongoing economic recovery at irish, european and global levels - supported across the eurosystem by the accommodative monetary strategy of the european central bank – will be a significant driver of monetary and financial conditions in ireland. stronger economic performance is very welcome in terms of its positive impact on living standards and financial stability. however small, highly globalised countries like ireland are more volatile than larger economies, which means that we can grow strongly for extended periods but are especially vulnerable to tail risks. high stocks of both public and private debt and the inherent volatility of the irish macro - financial system requires ongoing vigilance in terms of limiting procyclical tendencies in the operation of the financial system and the wider economy. to this end, in our role as the macroprudential authority, we are committed to improving the resilience of the irish financial system in the event of adverse shocks. the implementation of the eurosystem ’ s asset purchase programmes has been a major priority in recent years. in addition to the acquisition of assets, this has required extensive activity in relation to risk management and our policies in relation to setting the appropriate level

; and it allows advantage to be taken of the resources and management capacity of those savings banks which, on the basis of their greater soundness, have led the various integration processes. other far - reaching measures have been brought to bear in this restructuring process. for instance, there is the reform of the savings bank regulatory framework, which is allowing for their conversion into institutions more subject to market discipline and better prepared to meet the requirements of the new international regulatory framework. and we have the tightening of provisioning arrangements, which has entailed stricter requirements in respect of asset valuation criteria. i would also like to highlight the efforts to reinforce transparency, through the disclosure of exhaustive information on all spanish institutions ’ exposure to assets considered doubtful. the latest measure of significance was the approval in parliament of a royal decree - law ( rdl ), whose aim was to dispel doubts about our banking system. these doubts emerged essentially as a result of the contagion of the mistrust stemming from the sovereign debt crisis in certain euro area countries. three months later, this rdl may be said to have contributed significantly to allaying fears about the soundness of our banking sector and to substantially speeding through the restructuring of our savings banks. the rdl reinforces the solvency of all spanish institutions, requiring of them a core capital ratio of at least 8 %, with a further 2 % required for unlisted banks and those more reliant on wholesale markets, which are those in which the main doubts were concentrated. the rdl also stipulates that institutions receiving public aid should pursue their financial activity through a bank, which will better enable them to obtain funds on markets and will contribute to enhancing their transparency in the face of investors. the process laid down in the rdl is unfolding as scheduled. all institutions that have applied for aid from the frob have sent their recapitalisation plans to the banco de espana, and the work on the valuation of these institutions, which will be set by independent experts, is already under way. of the 13 institutions or groups of institutions that need to reinforce their capital, the four banks will fund themselves on the market, while the savings banks have submitted various strategies, which initially or ultimately include the possibility of obtaining the necessary funds from the frob, which acts as a backstop that assures the markets that all spanish institutions will have a core capital ratio of at least 8 %. now, how and when parliament has decreed, the