RBA announces $3.8bn profits

RBA announces $3.8bn profits
RBA announces $3.8bn profits

The RBA have announced they made a $3.8bn profit this year, a stark contrast to the $900 million they reported as losses last year.

It represents a turnaround of $4.7 billion turnaround.

RBA governor Philip Lowe began his statement saying the global economic expansion continued over the past year.

He said unemployment rates have declined further, inflation rates remain low, and financial conditions are still expansionary.

"This improvement in the global environment is helping the Australian economy," he said.

"Economic growth has gradually picked up and inflation is moving closer to the Reserve Bank’s target."

Governor Philip Lowe's salary total remuneration (including superannuation) rose to $1.02 million, or up 10 per cent from $930,000 in 2017, but back in line with his predecessor Glenn Stevens' remuneration.

The $3.8bn profits represent a $4.7 billion turnaround from last year's $900 million loss.

The RBA made a net gain of $3 billion from securities and foreign exchange compared to last year's loss of $1.8 billion.

Net interest income was down 10 percent to $900 million as the RBA continued to hold interest rates throughout the year.

The Reserve fund only dished out around half of the $1.3 billion they gave to the Commonwealth Government last year. This year they only released $669 million.

The Reserve Bank's earnings come from two sources, underlying earnings, which comprises net interest and fee income and less operating costs, and valuation gains or losses.

Net interest income arises because the bank earns interest on almost all of its assets.

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RBA announces .8bn profits

The RBA suggested valuation gains and losses result from fluctuations in the value of the Reserve Bank's assets because of movements in exchange rates or in yields on securities it holds.

"A depreciation of the Australian dollar or a decline in interest rates results in valuation gains," the RBA noted.

"Conversely, an appreciation of the Australian dollar or a rise in market yields leads to valuation losses.

"These gains and losses are realised only when the underlying asset is sold or matures.

"Valuation gains and losses are volatile, as both exchange rates and market interest rates fluctuate in wide ranges over time.

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RBA announces .8bn profits

 

The RBA said they measure their property at fair value.

Their properties are formally valued annually by an independent valuer. They recently sold their Collins Street office, their Melbourne HQ, for $160 million after only expecting around $100 million.

 

 

 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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