MNI: BOJ Posts Net Profit in 1H FY17; Foreign Assets Up on Yen

     TOKYO (MNI) - The Bank of Japan said Tuesday that it posted a net profit of

Y550.2 billion in the first half of fiscal 2017 to Sept. 30, improving from a

net loss of Y200.2 billion a year earlier, as the weaker yen pushed up the value

of its foreign currency assets.

     The net gain was due mainly to profits from foreign-exchange transactions,

the BOJ said. These profits came to Y128.8 billion in the six-month period, due

to the depreciation of the yen, reversing a loss of Y697.6 billion in the same

period the year before.

     The dollar stood at Y112.49 and the euro at Y132.89 at the end of

September, compared with Y101.34 and Y113.92 at the end of September 2016.

     Interest payments on government bond holdings totaled Y597.2 billion in the

April-September period, down from Y628.4 billion a year earlier.

     The BOJ also said it posted a pretax profit of Y668.5 billion for the first

half of this fiscal year, compared with a loss of Y172.1 billion a year earlier.

     The central bank is saving roughly half of its interest income on Japanese

government securities as a provision against losses it will face when it

eventually ends large-scale monetary easing.

     The BOJ transferred Y227.9 billion to a provision for possible losses on

bond transactions, down from the transfer of Y241.8 billion a year before.

     Assets held by the BOJ at the end of September totaled Y513.4 trillion, up

Y56.6 trillion, or 12.4%, from Y456.8 trillion a year before.

     The rise in assets was due to an increase in outright Japanese government

bond purchases. The monthly pace of JGB buying by the BOJ fluctuates under the

yield curve control policy framework, but the balance of its JGB holdings has

been steadily increasing every year since the start of aggressive easing in

April 2013.

     The BOJ's capital adequacy ratio at the end of September was 8.12%, up from

8.0% at the end of September 2016.

     That ratio is at the low end of the BOJ's desired range for its own

capital, which is two percentage points above or below 10%.

     The outstanding balance of long-term JGBs held by the BOJ at the end of

September totaled Y404.2 trillion, up from Y340.9 trillion a year earlier.

     The balance of banknote issuance was Y100.8 trillion at the end of

September, a 4.6% increase from the end-September 2016 level of Y96.3 trillion.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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