EXCLUSIVE: BOJ Posts 2nd Year of Higher Profit

May 29, 2018

Tokyo- The Bank of Japan posted the second straight year of higher net profit in the year ended in March, partly thanks to stock-related gains, informed sources told Jiji Press on Monday.

The profit growth also reflected a rise in interest receipts linked to the central bank's massive purchases of Japanese government bonds as part of its monetary easing policy.

The BOJ is believed to have earned a net profit of over 700 billion yen, up from 506.6 billion yen the previous year, the sources said.

The BOJ's net profit will be paid to state coffers after legal reserves and dividends are deducted. The bank will announce its earnings shortly.

The bank's total assets hit a record high of some 530 trillion yen at the end of March, as holdings of JGBs and exchange-traded funds increased under its monetary easing policy.

Interest receipts on its JGB holdings are believed to have totaled some one trillion yen, roughly the same as the previous year, the sources said.

The BOJ buys ETFs at an annual pace of some 6 trillion yen. At the end of March, the balance reached about 19 trillion yen.

Dividends from ETFs increased on the back of higher corporate dividends thanks to improved earnings. In addition, there was growth in gains from the sale of stock holdings, reflecting higher equity prices.

In April 2016, the BOJ started selling stocks that it bought from banks to avert financial crisis.

Meanwhile, the central bank saw foreign exchange losses in its foreign currency-denominated assets due to the yen's strength.

The BOJ is believed to have booked 400 billion to 500 billion yen in bond loss reserves to prepare for possible interest rate increases in the future. Jiji Press