Reserve Bank's net profit drops

Reserve Bank Governor Alan Bollard.
Reserve Bank Governor Alan Bollard.

The Reserve Bank made a net profit of $118 million for the the year to the end of June, down from $144m in the previous financial year.

According to its annual report out today, the bank will pay the Government a $160 million dividend, down from $210m last year.

The dividend is not directly related to net profit due to the timing of the realisation of revaluation gains and losses on foreign exchange rates and interest rates. An unusually large dividend was paid in 2009 when big foreign exchange gains were made. But earnings available for a payout have been lower in recent years as lower interest rates fed through to lower interest earnings.

The overall rise in the New Zealand dollar had also led to losses on foreign exchange, with losses of $38m in the past year. The central bank also made a $73m loss on the market value of financial instruments.

Departing Governor Alan Bollard got a slight pay rise in his last year on the job, making between $600,000 and $610,000 a year. Last year, Bollard's pay band was $590,000 to $600,000, up slightly from $580,000 to $590,000 in the previous year.

The bank has 99 staff on $100,000 a year or more.