THE Bank of England (BoE) last year made its highest profit since its 1694 creation as it ramped up its activities as a result of the financial crisis. &nbsp;<br />&nbsp;The &pound;995m pre-tax profit for the year to February, revealed last night in its annual report, resulted from its decision to provide &nbsp;financing of up to nine months to institutions based on the then base interest rate of 5.5 per cent. When the base rate was swiftly reduced to its current level of 0.5 per cent, the BoE reaped the rewards from the wider spread.&nbsp;<br />&nbsp;This triggered a more than five-fold profit increase on the previous year. It made &nbsp;&pound;7m &nbsp;by supporting the failed Bradford &amp; Bingley and &pound;4m &nbsp;from Northern Rock. The Bank made a &pound;573m post-tax income on its Special Liquidity Scheme, accounted for separately in the annual report. It still holds &pound;287bn of hard-to-trade assets swapped under the scheme.<br />&nbsp;Last night, the BoE insisted its profits were warranted. &ldquo;It is entirely right that it charges fees to set the right incentives for financial institutions to use its facilities, and protect itself and taxpayers from potential credit risk,&rdquo; said BoE spokesman Andrew Wardlow.&nbsp;Chancellor Alistair Darling will &nbsp;reap the rewards of the central bank&rsquo;s success, with the Treasury receiving half of its profits in the form of dividends. The other half will be used to bolster the BoE&rsquo;s reserves.<br />&nbsp;Meanwhile, Governor Mervyn King stepped up pressure on the Treasury to grant the BoE further powers. &ldquo;The Bank&rsquo;s new statutory responsibility for financial stability is welcome. But I regret that the new responsibility has not been accompanied by any new powers to deal with banks before they fail,&rdquo; he said.<br />&nbsp;Permanent staffing levels at the BoE increased by six per cent to 1,666 people in the year &ndash; the first rise in 22 years &ndash; as the BoE tried to cope with its expanded balance sheet, which doubled in size during the period, due to the additional collateral it bought from financial institutions.<br />&nbsp;In recognition of the &ldquo;exceptional workload,&rdquo; with staff in the midst of the financial crisis last year forced to cancel holidays and work weekends, the BoE increased its bonus and special payments budget from the usual seven per cent of salaries to 8.1 per cent. &nbsp;And overall staff costs rose to &pound;144m in 2009, up from &pound;124m in 2008.<br />&nbsp;King himself took home a salary of &pound;297,920 after refusing a rise, but has now accrued a pension of &pound;5.4m with deputy governor Charlie Bean building up a &pound;1.4m pension pot.&nbsp;