Norinchukin Bank books annual loss of $12.63 billion on US and European bonds
TOKYO : Japan's Norinchukin Bank on Thursday reported a net loss of 1.81 trillion yen ($12.63 billion) for the year ended March 2025 as it sold off its portfolio of U.S. and European government bonds.
The bonds had plummeted in value when interest rates in the U.S. and Europe began to rise from 2022 and remained higher for longer than anticipated. In June last year, Norinchukin Bank said it would sell down some of the bonds to stem the losses.
Over the year it sold off 17.3 trillion yen ($120.94 billion) of low-yielding assets, mostly U.S. and European government bonds.
Norinchukin had built up big positions in the bonds in search of higher returns during the years of negative interest rates in Japan.
The bank is the principal financial institution for Japan's farm, forestry and fishery cooperatives and has a business model centred on securities investments rather than generating income from lending.
As such it has not benefited 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.
Norinchukin said it still had 1.2 trillion yen of unrealised losses on its bond portfolio at the end of March this year, but forecast a profit of between 30 billion yen and 70 billion yen for its current financial year which ends in March 2026.
"With uncertainty in the global economy, including from the Trump administration, there's no room for complacency," chief executive Taro Kitabayashi told a press briefing in Tokyo.
Chief Financial Officer Masaki Nagano told the press briefing Norinchukin was not immediately impacted by the spike in yields of long-term sovereign bonds this week as the bank does not hold ultra long-term foreign bonds.
But if the higher yields persist it could lead to unrealised losses and the bank would consider using interest rate hedges as a way of managing the risk, Nagano said.
The bank has also become one of the world's largest investors in collateralised loan obligations (CLOs) and held 8.3 trillion yen worth of the securities at the end of March, according to its results presentation.
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)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
an hour ago
- CNA
Gaia Series 89: Upheaval! Eating Out Survival
Sukesan Udon opens in Tokyo as its parent company Skylark targets 200 outlets nationwide to challenge Japan's top noodle chains. A cold February morning in Tokyo's Sumida Ward sees over 170 eager customers lining up outside the newly opened Ryogoku branch of Sukesan Udon. Originating from Kitakyushu in Fukuoka Prefecture, this marks the brand's first foray into Japan's capital, signalling the start of an ambitious nationwide expansion led by Skylark Holdings, one of the country's largest restaurant operators. At the heart of the excitement is the eatery's most popular item: Beef and Burdock Tempura Udon, priced at a modest 790 yen (S$7.10). The noodles are firm yet chewy, the hallmark of true udon, and the broth, painstakingly prepared with mackerel, kelp and other ingredients, offers a depth of flavour with a hint of sweetness. One customer commented, 'The noodles are wonderfully chewy, and the beef is sweet and delicious.' Beyond udon, Sukesan boasts an extensive menu of over 100 items, including a sweet and spicy beef curry and a variety of slow-simmered oden dishes. Botamochi rice cakes are another staple, with over 5.4 million sold annually. A meal set including these treats is priced at 1,030 yen maintaining the brand's promise of affordability. Founded in 1976 by Mr Shoji Onishi, Sukesan Udon has become a beloved fixture in Kyushu with about 80 outlets, many of which operate 24 hours to serve both night workers and families. When asked how often they visit, one regular replied, 'Every day? I always come here for lunch,' a testament to Sukesan's status as a beloved local staple. With Mr Onishi stepping down and no clear successor in place, management was eventually handed over to an investment fund before Skylark Holdings acquired the brand. Mr Makoto Tani, Skylark's chairman for the past 17 years, sees great potential in Sukesan. 'I'm convinced that Sukesan Udon's taste will be loved by people all across Japan,' he said. 'I've been eating there for 35 years and have no doubt about it.' With over 3,100 restaurants nationwide and brands like Gusto and Bamiyan under its wing, Skylark has a formidable presence. However, the company has faced growing pressure from inflation and rising operational costs. Mr Tani explained, 'There's now a gap in the market. And that's where Sukesan Udon clearly fits in.' The udon industry is no stranger to competition, with giants like Marugame Seimen and Hanamaru Udon operating 853 and 418 outlets respectively. Against this backdrop, Skylark plans to open 200 Sukesan branches within five years. The integration of Sukesan into Skylark's operational model began with a rigorous process of taste replication. At Skylark's central kitchen in Kitakyushu, Sukesan's curry, one of its original dishes, was meticulously reproduced using different equipment and tested across various simmering durations. One executive noted, 'The texture is still slightly off, I think.' Mr Haruyoshi Sakita, formerly Skylark's CEO and now head of Sukesan, delivered a firm assessment. 'Sorry, but I can't give this a passing mark,' he said. Mr Sakita, who has overseen more than 100 store conversions, brings both rigour and a sense of stewardship to the brand. 'I have absolutely no intention of forcing a Skylark style upon it,' he said. 'What I want to do is bring out the best of both sides and turn one plus one into three or even five.' In January, he chaired a boardroom discussion on converting existing Gusto outlets into Sukesan locations to reduce internal brand competition. 'We aim to boost total regional sales,' he said. One of the first test conversions took place in Misato, Saitama Prefecture, where Mr Sakita personally oversaw every design detail, from oden aroma placement to cost-efficient renovation. 'When customers come to this new restaurant, I want them to immediately think, 'Oh, this is Sukesan,'' he explained, underlining the balance between brand recognition and budget-conscious transformation. Supporting these efforts is Mr Makoto Ezaki, a Skylark veteran tasked with training manual development. Mr Ezaki has produced over 2,000 instructional videos to help part-time staff master everything from noodle handling to frying burdock tempura. 'I thought this was crucial, so I insisted on trying it myself. It's more complex than I expected,' he admitted during a hands-on session in the kitchen. The videos proved invaluable during the Ryogoku store launch. A part-time staff member said, 'First, I watched the video, then tried it myself. And because I could watch it again afterwards, it felt much easier to grasp.' The opening was a success, with Mr Sakita greeting families who filled the space, Sukesan's main target demographic. 'Protecting both flavour and price, the Skylark way, they took their first major step forward,' the narrator said. Sukesan's journey into Tokyo is not merely an expansion. It is a calculated strategy in preserving culinary heritage while leveraging modern scalability. 'From now on, it's about working together to bring Sukesan to people all across Japan,' Mr Sakita said. 'Of course, there'll be challenges, but personally, I'm excited.'
CNA
2 hours ago
- CNA
BOJ must ensure fiscal considerations don't overtake mandate, deputy governor says
TOKYO :The Bank of Japan should make clear it is not monetising government debt by ensuring that fiscal considerations do not take precedence over its goal of achieving price stability, Deputy Governor Shinichi Uchida said on Saturday. Central banks can theoretically print unlimited amounts of money and completely finance government debt, which poses delicate questions around their huge government bond purchases conducted to revive their economies, Uchida said. Central banks see "monetising," or directly financing government deficits, as taboo, as doing so risks letting inflation get out of control and potentially eroding their independence. Such unconventional monetary easing steps taken since the 2008 financial crisis present a challenge for central banks across the globe, he said in a speech. The BOJ's monetary easing, for its part, was aimed at achieving its 2 per cent inflation target, and not at funding government debt, Uchida said. "In considering what constitutes monetary financing or not, the important question is whether monetary policy is compromised by fiscal considerations," Uchida said. In deploying and rolling back monetary easing, the BOJ must focus on achieving its economic and price mandate. "The result must be that the Bank does not deviate from such policy conduct out of fiscal considerations," he said. "In its future conduct of monetary policy, the Bank should make it clear that it is not engaging in monetary financing." The remarks come against the backdrop of growing pressure from opposition and ruling parties on Prime Minister Shigeru Ishiba to increase budget spending ahead of an upper house election due next month. Some analysts have blamed concerns over Japan's worsening finances for pushing up super-long bond yields to record highs last month, and complicating the BOJ's efforts to taper its huge bond purchases. Under a radical monetary easing programme deployed in 2013, the BOJ increased purchases of government bonds and adopted a policy of capping long-term interest rates around zero. While the BOJ ended the policy last year, its short-term policy rate is still at 0.5 per cent. The central bank plans to lay out in June a new bond tapering plan for fiscal 2026 and beyond as part of its effort to normalise monetary policy.
Independent Singapore
4 hours ago
- Independent Singapore
Former DPM Teo Chee Hean to take over as Temasek chairman in Oct, succeeding Lim Boon Heng
Photo: Facebook/Temasek SINGAPORE: Former senior minister Teo Chee Hean will succeed Mr Lim Boon Heng as the fifth chairman of Singapore's investment company, Temasek Holdings, the company announced on Friday (June 6). Mr Teo will first join Temasek's board as deputy chairman on July 1, before taking over as chairman on Oct 9, after the company's third-quarter board meeting this year. Mr Lim served 12 years as chairman during his 13-year tenure as Temasek's board director. Under his leadership, Temasek's net portfolio grew from S$223 billion in 2014 to S$389 billion in 2024. He led the company's global expansion in Europe and the US and its community efforts during the COVID-19 pandemic. He also built strong ties between Temasek, its portfolio companies, workers, and the government. 'In my 13 years at Temasek, I have been privileged to work with a capable, dedicated team unified by a strong sense of purpose and commitment to excellence. I am always inspired by my colleagues' collective conviction that, like generations before us, we must always act today with tomorrow clearly in our minds,' he said. Mr Teo, a former political stalwart, served as Deputy Prime Minister from 2009 to 2019 and later as Senior Minister until he left politics in May 2025. Temasek said Mr Teo's 'wealth of experience and strategic insights will bring valuable perspectives to Temasek as it continues to evolve and grow as a global investment company.' 'In this era of deepening global uncertainty, we must remain clear-minded on critical matters such as international relations, security, and climate change,' Mr Teo said. 'I look forward to working with Temasek's board, management team and members of the wider Temasek family to build on the achievements of Temasek and chart a path for its continued success in the new global environment,' he added. Mr Lim noted that Mr Teo's depth of experience in public service and his seasoned wisdom on both local and global affairs make him the right helmsman for Temasek. 'I am truly pleased that Chee Hean will guide Temasek into its next chapter of growth as a global investor,' he added. /TISG Read also: Warren Buffett to step down as CEO by year-end, hands Berkshire Hathaway reins to Greg Abel
