Japan's Norinchukin Bank (NORB.UL) booked a net profit of 58 billion yen ($393 million) for the April-June quarter, as its mass offloading of low-return foreign government bonds over the past year cut its foreign currency-denominated funding costs.
The results compare to a net loss of 412 billion yen over the same period a year earlier.
The bank had run up nearly 3 trillion yen of unrealised loss by 2023 on its portfolio of foreign government bonds as rising interest rates in the U.S. and Europe slashed their value.
Realising this loss left the bank booking a net loss of 1.8 trillion yen for the year ended March 2025.
Norinchukin retained its forecast of a net profit of 30 billion yen to 70 billion yen in this financial year.
It has said it will use the proceeds from the bonds it sells to make new investments, including in Japanese government bonds, equities, real estate, private equity and infrastructure.
Unlisted Norinchukin is the principal financial institution for Japan's farm, forestry and fishery cooperatives and generates returns primarily through securities investments rather than lending.
It had built up enormous positions in higher-yielding foreign government bonds to eke out returns during the years of rock bottom interest rates in Japan but these unravelled as interest rates rose in the U.S. and Europe and stayed high.
Norinchukin still has 1.22 trillion yen ($8.26 billion) of unrealised losses in its portfolio as of the end of June.
($1 = 147.5500 yen)
