The Bank of Japan said Tuesday it posted a net income of 594.4 billion yen in fiscal 2002, down 869.1 billion yen from the previous year.

The profit decline reflects the central bank's ultra-easy monetary policy and other steps aimed at stabilizing Japan's financial system.

In fact, the BOJ took 65.8 billion yen in charges to cover latent losses on bank-held shares it has purchased since November.

The BOJ said its operating profit fell 821.2 billion yen to 662 billion yen, with operating expenses having grown 282 billion yen, largely on foreign-exchange losses caused by the yen's appreciation and losses related to long-term government bond holdings.

The profit decline was also blamed on a drop of 539.2 billion yen in operating income to 2.01 trillion yen.

The BOJ said it will place 15 percent, or 89.1 billion yen, of its fiscal 2002 net income into its reserves, as approved by the finance minister, in order to bolster its finances.

Usually, the central bank sets aside 5 percent of its net income for its reserves, the core of its capital, as stipulated by the BOJ law.

After paying fiscal 2002 dividends totaling 5 million yen, the BOJ will contribute 505.3 billion yen to state coffers.

The BOJ said its capital adequacy ratio stood at 7.62 percent at the end of fiscal 2002, down from the previous year's 8.38 percent, due to an increase in the average balance of bank note issues used as a denominator to calculate the ratio.

On its fiscal 2002 balance sheet, the BOJ said that its assets totaled 141.17 trillion yen, up 2.6 trillion yen from the previous year.

The asset gain was led by an increase in accounts receivable under resale agreements and government bond holdings.

The BOJ also said its liabilities rose 3.4 trillion yen to 138.17 trillion yen, as bank note issues expanded while the balance of current deposits rose.