Fed's balance sheet reaches $5.05 trillion at end of 2013

WASHINGTON (AFP) - The Federal Reserve said Friday its balance sheet swelled to US$4.0 trillion (S$5.05 trillion) at the end of 2013 as it made massive asset purchases to support the US economy.

The Fed, in a report of its 2013 financial results, said net assets increased by US$1.1 trillion compared with its balance on December 31, 2012.

It paid net profit of US$79.6 billion to the US Treasury. By law, the non-profit central bank is required to turn over any profit in excess of operating and other expenses to the government.

Last year's Treasury payment was less than the record US$88.4 billion in 2012. The Fed said it had reaped no gains on the sales of US Treasury securities in 2013 compared with US$13.3 billion in gains in the prior year.

While earnings are generated by the interest rate the Fed charges to banks in refinancing operations, the bulk of the Fed's 2013 earnings came from interest accrued from the asset-purchase program, which is aimed at tamping down long-term interest rates to encourage US lending and hiring.

Interest income on securities grew to US$90.4 billion at the end of 2013, an increase of US$9.9 billion from a year earlier.

The central banked racked up US$85 billion a month in asset purchases every month last year. In January and February it cut that back by US$10 billion each month, slowing the buying pace to US$65 billion.

By the end of the year, the Fed's holdings of US Treasury securities increased by US$550.2 billion, and federal agency and certain mortgage-backed securities grew by US$583.5 billion.

The Federal Open Market Committee is widely expected to decide another US$10 billion cut to asset purchases at its policy meeting next Tuesday and Wednesday.