BSP narrows losses to P3.17B in first 7 months

MANILA, Philippines – The Bangko Sentral ng Pilipinas narrowed its losses in the first seven months of the year amid lesser interest payments and a depreciating peso.

The BSP incurred a net loss of P3.17 billion as of July this year, an improvement from the P19.21 billion loss recorded in the same period in 2013.

Central bank revenues slid 29 percent to P27.83 billion from P39.27 billion as miscellaneous income plunged 55 percent to P9.34 billion from P20.65 billion.

The BSP’s interest income, meanwhile, remained unchanged at P18.49 billion in the seven months to July from P18.62 billion a year ago.

At the same time, expenses were cut by 27 percent to P38.78 billion from P53.11 billion last year.

Interest expense decreased by 31 percent to P25.66 billion as of July from P37.12 billion in the same period last year, while other expenses went down by 18 percent to P13.12 billion from P15.99 billion.

The lower interest expense is on the back of BSP’s efforts to flush out funds from the special deposit account facility last year.

The central bank in early 2013 slashed the SDA rate by a total of 150 basis points to a historic low of two percent and also ordered 30 percent of investment management accounts in the facility removed by July last year. The rest of the IMA – the singular fund accounts offered usually by banks to retail investors – was ordered to be taken out of the facility by November 2013.

Discouraging investments in the SDA was done so funds would be put instead to other activities and instruments beneficial to the growth of the economy.

Meanwhile, the BSP also recorded a gain of P7.78 billion from foreign exchange operations in the seven months to July, a reversal of a P3.66-billion loss recorded in the same period last year.

This was due to the movement of the peso, which weakened to an average of P44.3518 as of July this year from an average of 41.5453:$1 in the same period last year. A depreciating peso increases the value of foreign exchange-denominated investments.

Foreign currency-denominated transactions of the central bank include re-investments of matured investments, servicing of obligations and maturity of derivatives instruments.