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BSP 10-month profit drops to P12.4 B

Data released by the central bank showed it booked a net income of P12.38 billion from January to October, P2.88 billion lower than the P15.26 billion earned in the same period last year. File

MANILA, Philippines — Lower revenues brought about by dwindling miscellaneous income mainly caused a 19 percent drop in Bangko Sentral ng Pilipinas (BSP) earnings in the first 10 months of the year.

Data released by the central bank showed it booked a net income of P12.38 billion from January to October, P2.88 billion lower than the P15.26 billion earned in the same period last year.

Revenues dropped 14.4 percent to P53.35 billion from P62.33 billion as miscellaneous income – representing all earnings arising from sources other than interest income – fell 75.9 percent to P5.65 billion from P23.5 billion.

The BSP’s miscellaneous income includes fees, rentals and proceeds from sale of coins or publications.

The sharp drop offset the 22.8 percent rise in interest income to P47.7 billion from P38.8 billion during the same period.

The BSP said expenses, on the other hand, declined 4.6 percent to P55.82 billion in the first 10 months of the year from P58.49 billion in the same period last year.

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The BSP recorded a net loss before gains on foreign exchange fluctuations, income tax expense and capital reserves of P2.47 billion from January to October, reversing the P3.83-billion profit booked in the same period last year.

The net income before gain or loss on foreign exchange fluctuations refers to revenues less expenses from regular operations.

Foreign exchange fluctuations jumped 30.5 percent to P14.92 billion from the year-ago level of P11.43 billion. The gains were realized from servicing of matured foreign exchange obligations as well as the maturity of derivatives instruments.

This also represents realized gains arising from foreign currency-denominated transactions of the BSP, including rollover or re-investments of matured foreign exchange investments with foreign financial institutions and foreign exchange -denominated government securities.

The peso remains the worst performing currency in the region, weakening close to two percent since the start of the year.

It breached the P51 to $1 level a few months ago, hitting a fresh 11-year low of P51.7 to $1 amid the volatile markets due to the normalization path being undertaken by the US Federal Reserve, the geopolitical tension between the US and North Korea and the projected current account (CA) deficit due to the ballooning trade deficit.

The local currency has recovered and is now trading within the P50 to $1 level.

The BSP books gains or losses from fluctuations in foreign exchange rates on matured, sold, paid and/or exchanged or settled foreign exchange assets and liabilities. It participates in the foreign exchange market to temper sharp fluctuations in the exchange rate.

On such occasions of excessive movements, the BSP enters the market mainly to maintain order and stability. When warranted, it also stands ready to provide some liquidity and ensure that legitimate demands for foreign currency are satisfied.

The BSP booked an all-time high net income of P17.81 billion last year, reversing the P4.42-billion net loss recorded in 2015. It recorded a record gain of P19.12 billion from foreign exchange fluctuations.

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