The Dutch Central Bank said Friday interest rates hikes by Europe's central bank led to a 3.5 billion-euro ($3.8 billion) loss last year, adding it had the buffers to cushion the blow.

The Amsterdam-based DNB said more than 2.3 billion euros of the loss will be soaked up by previously made provisions for financial risks.

The remaining 1.1 billion euros will be charged to capital and reserves.

"The negative result for 2023 is a consequence of the interest rate increases that the European Central Bank implemented to reduce inflation," the DNB said.

"The DNB's interest costs increased while interest income barely increased," it added in a statement.

The DNB's losses however "are offset by lower financing costs for the Dutch government," the banker said.

Frankfurt-based ECB said Thursday it lost 7.9 billion euros last year, its first loss since 2004.

Just like the DNB, the ECB's losses "are largely absorbed through the use of a provision for financial risks," the Dutch banker said.

The ECB began raising borrowing costs at an unprecedented rate in July 2022 after Russia's war in Ukraine pushed up energy and food costs, and an economic rebound after the pandemic led to bottlenecks in the global economy.

It has held rates steady since October in the face of cooling inflation and a stuttering eurozone economy, leaving the benchmark deposit rate at a record four percent.

Eurozone inflation slowed to 2.8 percent in January, down from 2.9 percent in December.

Economists expect the ECB to begin slashing rates in the coming months. President Christine Lagarde has previously suggested the first cut could come in the summer.

The DNB however said it did not expect to return to profits before 2029.