TOKyO (Reuters) - As some were found not sufficiently appreciating the risk of deposit outflows, the Bank of Japan said it will intensify investigation into how lenders are assessing the impact of rising interest rates on their profitability in on-site inspections for next fiscal year.

Following a ten-year, large stimulus ending last year, the BOJ hiked interest rates in January to 0.5%, their highest level since the global financial crisis of 2008.

The central bank said on Tuesday in a report on the results of its on-site inspections for the current fiscal year ending in March that the higher interest rates had helped major financial institutions see their profitability grow.

The BOJ noted that some lenders struggled to predict realistically on the degree to which they could boost loan and deposit rates, as well as estimate how interest rate increases would affect their profitability.

According to the research, certain financial institutions suffered rising valuation losses on their security holdings since they lacked sufficient systems to reduce losses or managed risk.

As larger rivals or internet banks try to draw depositors with better rates or more convenient services, the BOJ also cautioned some smaller, regional lenders not ready enough to handle the possibility of an outflow of funds.

"There were banking organizations where deposits either trended down or up at a slow speed. Some neglected to thoroughly examine such changes in deposits."

The BOJ will intensify examination on whether lenders have an adequate awareness of how rising interest rates would influence their deposits, lending, and securities holdings in its inspections starting in April, the report added.

The BOJ will look at trends in deposits and if banking institutions experiencing declining or rising at a slower pace are implementing appropriate counter-measures," the article stated.

The BOJ would also examine whether financial institutions have procedures in place to handle risks of an outflow of deposits including via the internet, it stated.

Such rules highlight the focus the BOJ is paying to several hazards connected to its strategy to keep raising interest rates to levels judged neutral to the economy - viewed by its staff as anywhere from 1% to 2.5% on a nominal basis.