The European Central Bank said today it had increased net profits in 2016 largely thanks to its massive bond purchases, which also pushed its balance sheet to €3.7 trillion. 

The Frankfurt institution earned €1.19 billion profit last year, up from €1.08 billion in 2015, it said in a statement. 

The increase was "mainly owing to higher net interest income earned on the asset purchase programme portfolio and the US dollar portfolio," the bank said. 

The ECB's income comes from interest earned on its bond holdings, investing its foreign reserve assets and its own funds. 

In 2016, the ECB responded to fears of deflation in the euro zone by expanding its bond-buying programme.

The move was just one of the interventions in the economy aimed at driving growth and pushing inflation towards the central bank's target of just below 2%.

A faster rate of monthly purchases from March saw the ECB more than double the amount of bonds the Eurosystem - made up of the ECB and the 19 national central banks in the euro zone - holds under the scheme, hitting €1.65 trillion by the end of the year.

Interest earned by the ECB from the flood of bonds grew to €435m, helping push the bank's overall interest income to €1.6 billion, an 11% increase. 

The mass bond-buying also helped swell the Eurosystem's balance sheet by 32% to €3.7 trillion. 

ECB president Mario Draghi said at a regular press conference in December that the mass bond-buying would go on until December 2017, although the pace will drop to €60 billion a month from the present €80 billion starting in April. 

On the costs side, the ECB spent more on staff and administration, as it continues to expand its bank supervision arm after it was made the top euro zone financial regulator in November 2014. 

The ECB distributes its profits to the 19 national central banks that are part of the single currency. 

It shared out the first €966m at the end of January, and plans to pay out the remaining €277m on February 17.