MNI POLICY: BOJ: ETF Balance Rises To JPY34.2 Trln At End-Sept

The balance of ETF (exchange-traded fund) held by the Bank of Japan rose to JPY34.2 trillion at the end of September from JPY27.5 trillion at the end of September 2019, the BOJ said on Thursday, with unrealized profits at JPY5.85 trillion, up sharply up from JPY308.1 billion trillion at the end of March as the Nikkei rose to 3 decade highs.

The BOJ posted a net income of a record JPY928.8 billion in the first half of fiscal year 2020, up from a net profit of JPY921.4 billion a year earlier.

The increase was partly due to a draw down of foreign exchange reserves to offset losses stemming from the drop of the value of its foreign currency assets following the yen's gains -- losses that totaled JPY103.9 billion, improving from losses of JPY186.1 billion a year earlier. The yen stood at JPY105.46 against the dollar and JPY123.60 against the euro at the end of September, compared with JPY108.08 and JPY117.80 at the end of September 2019.

The central bank is putting roughly half of its interest income from Japanese government securities into reserves as a provision against the losses it will likely face when it eventually ends its large-scale monetary easing, transferring JPY197.3 billion, down from the transfer of JPY202.5 billion a year earlier.

Assets held by the BOJ at the end of September totaled JPY690.02 trillion, up JPY120.2 trillion, or 21.1%, from a year before. The outstanding balance of long-term JGBs held by the BOJ at the end of September totaled JPY485.3 trillion, up 3.4% from JPY469.4 trillion a year earlier.

The BOJ's capital adequacy ratio at the end of September was 8.59%, down to 8.79% at the end of March. 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%.