The Ukraine crisis will likely have a limited impact on Japan's banking system but risks could heighten if global markets destabilise, the Bank of Japan said on Thursday.

"It is notable that the impact of the situation in Ukraine on Japan's financial system is likely to be limited at this point," the BOJ said in a semi-annual report on the country's banking system.

"However, there is high uncertainty over future developments, and attention should be paid to the possibility that the impact on the financial system will become larger, possibly through an adjustment in global financial markets," it said.

(Reporting by Leika Kihara; Editing by Tom Hogue)