[TOKYO] The Bank of Japan's earnings rose 39 per cent in fiscal 2014 from the previous year due to coupon payments from the massive amount of government debt it is purchasing to reflate the economy.
That compared with a 26 per cent increase in earnings in fiscal 2013, BOJ data showed.
The BOJ had 1 trillion yen (S$11 billion) in net income in the fiscal year that ended in March, the highest level since fiscal 2013, a statement showed on Wednesday.
The amount of government debt on the BOJ's balance sheet was 269.7 trillion yen at the end of fiscal 2014, up 36 per cent from the previous fiscal year, the central bank said.
A declining yen boosted the BOJ's earnings by 760.1 billion yen, which is the biggest gain due to currency moves since the government revised the laws governing the BOJ in 1998, a central bank official said.
The BOJ returned almost all of its net income to government coffers, which is in line with central bank regulations, the statement said.
The central bank's capital adequacy ratio rose to 8.2 per cent in fiscal 2014, up from 7.7 per cent at the end of the previous fiscal year, the central bank said. The BOJ prefers to keep its capital adequacy ratio at 8 per cent.
The BOJ is buying JGBs at an annual pace of around 80 trillion yen to lift inflation to 2 per cent in the first half of fiscal 2016 and prevent the economy from returning to deflation.
These debt purchases are equivalent to more than twice the size of new debt the government sells to finance the budget deficit and have caused the BOJ's balance sheet to expand rapidly.