Norges Bank makes Nkr26.2bn loss on back of appreciating krone

Norges Bank finished 2025 by posting a loss of Nkr26.2 billion ($2.75 billion).

In its annual report published today (February 27), the Norwegian central bank blamed its currency, which has appreciated sharply over the past year, for generating the losses. The report discussed the results of both the bank’s foreign exchange reserves and the country’s sovereign wealth fund, which is managed by the central bank.

Norway’s Nkr749 billion reserves comprise three tranches: an equity portfolio, a fixed income portfolio and a petroleum buffer portfolio. The market value of the first two declined to Nkr727.5 billion by the end of 2025 from Nkr758.2 billion in 2024. The equity portfolio was valued at Nkr164.1 billion, the fixed income portfolio at Nkr563.4 billion.

“In international currency terms, the return on the total equity and fixed income portfolio was Nkr40.8 billion, or 6.9%,” the bank wrote. It added that the return on the equity portfolio was Nkr17.7 billion and the return on the fixed income portfolio was Nkr23.1 billion, equivalent to 18.8% and 3.9% respectively.

In krone terms, the return on the equity and fixed income portfolio was -0.7%.

Norges Bank said the returns on the portfolios were 0.06 and 0.01 percentage points higher, respectively, than the return on the portfolios’ benchmark indexes.

It noted that over the past decade, the annual return on the equity and fixed income portfolios had been 13% and 0.9%, with an overall absolute annual return of 3.9%.

The petroleum buffer portfolio is there to help the government manage converting foreign currency into krone, as well as for “any transfers to and from” the sovereign wealth fund, the bank wrote. This portfolio’s market value decreased by Nkr9.6 billion to Nkr21.2 billion, with an overall negative return of -Nkr3.2 billion, of which “interest income was reduced by the krone appreciation”.

Sovereign fund

Norges Bank manages one of the world’s largest sovereign wealth funds, the “government pension fund global” (GPFG), on behalf of the Norwegian ministry of finance. At the end of 2025, the value of this fund was Nkr21.3 trillion, compared with Nkr20.7 trillion in 2024.

GPFG’s investments comprise 71.3% equities, 26.5% fixed income, 1.7% unlisted real estate and 0.4% unlisted renewable energy infrastructure. These investments generated a return of 15.1% or Nkr2.4 billion “in accounting terms”, in 2025 owing mainly to strong gains in global equity markets, the bank wrote. It added that this return was still 0.28 percentage points below the bank’s benchmark index.

The GPFG’s value in krone terms decreased by Nkr1.2 trillion, the bank noted, adding that this had “no bearing” on the assets’ purchasing power in foreign currency. The bank transferred Nkr327 billion to the government after paying management fees.

Equities held in the GFPG delivered returns of 19.3% thanks to “solid corporate earnings in investee companies and optimism related to artificial intelligence”. Fixed-income instruments netted a 5.4% return and investments in unlisted real estate 4.4%. Unlisted renewable energy infrastructure returned 18.1%.

The bank’s board considered the overall return on the fund over time to have been “solid”. The average annual return between 1998 and 2025 was 6.6%, while the overall annual net return – after deductions for inflation and management costs – was 4.3%.

Norges Bank noted that the returns in the fund’s real estate investments had been weak relative to the equities and bonds sold to the vehicle. To improve this, the bank made “several organisation changes” in early 2025 and took on a new strategy: whereas previously, it had invested in offices and retail in “predetermined countries and cities”, it would now adopt a “broader approach”.

Cash, CBDC and payments

The bank wrote that most payments in the country are made digitally in a “secure and efficient payment system”. Cash usage continued to decline from 2024’s Nkr38.5 billion to an average of Nkr37.7 billion in circulation in 2025, and the bank had made “cash contingency arrangements” in recent years with respect to the “volume and geographic distribution of cash”.

In December 2025, Norges Bank shelved plans to issue a CBDC, something it had been researching for more than a decade. In today’s report, it wrote that although issuing a retail or wholesale CBDC was “not warranted” at present, the situation may change. 

“For example, blockchain technology may improve payment and financial systems in the longer term, and Norges Bank will ensure that social considerations are safeguarded if the technology becomes more widely adopted,” it wrote. “Norges Bank is therefore continuing its research with the aim of being ready to introduce a CBDC if it becomes necessary to secure an efficient and secure payment system.”

The bank had also “further defined” the next generation solution for the country’s payment system, which was an “extensive undertaking and requires adaptations to safeguard security and contingency requirements”.