Falling interest rates have cut underlying earnings for the Reserve Bank of Australia (RBA) to its lowest level since the local currency was floated in 1983.
The RBA said that although its accounting profit was higher in 2011/2012 compared to the previous financial year, underlying earnings - which exclude capital gains - were lower because of lower interest rates in Australia and offshore.
In the 12 months to 30 June 2012, the RBA recorded an accounting profit of $1.076 billion, compared with a loss of $4.889 billion in the previous financial year," the central bank said in its annual report published on Thursday.
Underlying earnings were $710 million in 2011/12, compared to $897 million in the previous year.
"In nominal terms, underlying earnings are at their lowest level since before the float of the Australian dollar, reflecting the extremely low level of interest rates around the world," the RBA said in the report.
The RBA also made some realised valuation gains in the financial year.
"Notwithstanding the volatility in currencies, gains of $59 million were realised from foreign exchange sold at favourable exchange rates in the course of managing international reserves and conducting business for customers," it said.
However, the strength of the Australian dollar against the euro caused unrealised valuation losses of $39 million.