RBA incurs first loss

The Reserve Bank of Australia yesterday reported a loss of $1.39 billion for the year to June 2007 - a first for the central bank.

What the RBA terms "an accounting loss" is thanks to losses of $2.48 billion from the revaluation of the bank's foreign currency reserves, and which in turn reflects shifts in exchange rates over the last year.

The RBA said that underlying earnings - the bank's preferred measure of profit - increased to $1.38 billion in 2007 from $1.16 billion.

And the bank said "distributable earnings" fell slightly to $1.09 billion in 2007 from $1.18 billion in 2006. The RBA transferred the whole of this profit as a dividend to the federal government last month.

The RBA noted in the annual report that if it had adopted generally accepted accounting principles (first used in 1998) or AIFRS (first used last year) the bank would also have disclosed accounting losses in 1993 and also for three years running in the early 1970s. The bank reported accounting profits at the time, however.

Operating costs increased six per cent over the year, with staffing levels up three per cent. The higher costs reflect the investment in a business recovery site in north-west Sydney that opened earlier this year.