Vatican Bank doubles profit in 2016 using prudent approach

The Vatican Bank has reported a more than 100 per cent increase in profits in their latest annual report thanks to what they describe as a “prudent approach” to managing investments.

In the 136 page annual report, the Institute for the Works of Religion (IOR) report that net profits for 2016 were €36 million up from €16.1 million the year before, with these gains then being distributed in aid of the Holy See’s mission.    
The statement explains it was achieved through “a prudent approach in managing IOR’s investments in a year characterised by high volatility, global political uncertainty due to unexpected outcomes of major electoral events and low interest rates”.
The statement shows that in 2016 the IOR served nearly 15,000 clients worldwide, who entrusted to the Institute assets worth € 5.7 billion.

Although $40 million profit is nothing to sneeze at, it is a relatively small amount for the bank of an independent country. By comparison, the Fortune 500 companies averaged profits of $1.78 billion each in 2016, or more than 44 times that of the Vatican Bank, according to a new report by Forbes.

These results will be seen as a boost for Pope Francis’ Vatican financial reforms, which he has entrusted to Australian Cardinal George Pell. Soon after taking over as Prefect of the Secretariat of the Economy, Cardinal Pell announced a new management of the bank, including appointing billionaire hedge fund guru Michael Hintze to its board.  

Most of the Bank’s clients “are active in missions or perform charitable works at institutions such as schools, hospitals or refugee camps,” the report states. Its work is conducted worldwide, including “in countries with very basic infrastructure and underdeveloped banking and payment systems,” which means they depend on the IOR, especially for transferring donations from wealthier nations to poorer ones.

The report also notes that the IOR has consolidated and strengthened its internal governance and internal control system during 2016, implementing a Risk Appetite Framework and continuing to adapt to the new AIF regulatory framework while seeking “consistency with international best practices.”

Before the release of the report, the IOR’s 2016 financial statements were audited by the firm Deloitte & Touche and were reviewed by the Commission of Cardinals overseeing the institute’s work.