By Lewis Jackson
SYDNEY (Reuters) – Australia’s central bank recorded its fourth straight year of accounting losses in 2024, it said on Friday, as the legacy of its pandemic interventions lingers on its balance sheet.
The A$4.2 billion ($2.78 billion) loss for the year ended June 30 arises because the interest the bank earns on its portfolio of bonds and other assets, much of it acquired at rock-bottom interest rates during the pandemic, is far below the amount it pays its commercial bank depositors.
The cumulative losses, which began in 2021, have wiped out the bank’s equity, although this does not affect monetary policy. The bank’s negative equity position was A$20.4 billion on June 30.
“Negative equity does not affect our operations or ability to perform our policy functions, but the Reserve Bank Board considers it important that the RBA’s capital be restored over time,” Governor Michele Bullock said in an introduction to the 2023-2024 annual report.
“The Treasurer has indicated his continued support for rebuilding capital by retaining future profits.”
The bank reported an A$8.3 billion loss for underlying earnings and a A$4.2 billion valuation gain, mostly thanks to changes in its domestic government bond and foreign currency positions.
($1 = 1.5097 Australian dollars)