The Reserve Bank of Australia returned to a profit in the 12 months through June as it sold foreign securities and local assets increased in value.
The nation’s central bank posted net income of A$1.08 billion ($1.1 billion), it said in its 2012 annual report today. Underlying earnings were A$710 million; realized valuation profits totaled A$405 million; and unrealized valuation losses amounted to A$39 million, it said.
“The very large rise in the exchange rate that had been a feature of the preceding years – and which saw the Reserve Bank recording large valuation losses – abated,” Governor Glenn Stevens said in the report. “Underlying earnings remained low, however – in fact, they were lower in nominal terms than at any time in the past three decades, due to the very low level of yields on the Bank’s assets.”
Stevens’s total compensation was A$986,778, the central bank said, unadjusted from a year earlier.
In addition to foreign currency assets, the RBA holds 80 metric tons of gold on its balance sheet. Over 2011-12, the price of gold rose 12 percent in Australian dollar terms, the central bank said. As a result, the value of the central bank’s holdings of gold rose by A$400 million to A$4 billion at the end of June, according to the report.
A lack of activity in the gold lending market continued in the latest fiscal year, the RBA said. At the end of June, there was 1 ton of gold on loan, it said.
Australia’s central bank lowered interest rates by 1.25 percentage points from November to June to help shield the economy from slower global growth.
“The cash rate ended the financial year at 3.5 percent, which by historical standards is unusually low, and which helped to produce lending rates in the economy a little below their medium-term averages,” Stevens said in his statement accompanying the report.