TOKYO :Japan’s Norinchukin Bank recorded a net loss of 1.81 trillion yen ($12.63 billion) for the January-March quarter as it sold off its portfolio of foreign government bonds, it announced on Thursday.
The loss compared with a forecast net loss of approximately 1.9 trillion yen.
Over the past year Norinchukin has been forced to realise losses on its enormous portfolio of foreign sovereign bonds. These bonds plummeted in value when interest rates in the U.S. and Europe began to rise from 2022 and remained higher for longer than anticipated.
Norinchukin still had 1.2 trillion yen of unrealised losses on its bond portfolio at the end of March, down from 2.93 trillion yen at the end of September 2023.
The bank, which is the principal financial institution for Japan’s farm, forestry and fishery cooperatives, has a business model centred on securities investments rather than generating income from lending.
As such it has not profited from the rise in domestic interest rates that has been a boon for the banking sector. Japan’s three largest banking groups posted record annual profits last week.
During the years of negative interest rates Norinchukin bought masses of foreign government bonds in search of higher returns.
It has also become one of the world’s largest investors in collateralised loan obligations (CLOs) in recent years and held 8.3 trillion yen worth of the securities at the end of March.
Norinchukin had 40.3 trillion yen in market assets at the end of March, down from 59.5 trillion yen at the end of March 2022.
($1 = 143.3400 yen)
