BSP profit up 5-fold in 4 months

MANILA, Philippines — Earnings of the Bangko Sentral ng Pilipinas (BSP) jumped more than five times in the first four months of the year on the back of higher revenues and lower interest expense.

Data showed the net income of the central bank reached P17.55 billion from January to April this year, P14.18 billion higher than the P3.37 billion recorded in the same period last year.

Revenues surged 30.2 percent to P25.64 billion due to the 28.7 percent increase in interest income on international reserves and domestic securities to P22.96 billion.

On the other hand, expenses fell 21.4 percent to P16.92 billion on lower interest expenses and taxes and licenses.

The BSP recorded a net income before gains on foreign exchange fluctuations, income tax expense and capital reserves amounting to P8.71 billion from January to April, reversing the P1.85 billion net loss booked in the same period last year.

Gains on foreign exchange fluctuations jumped 69.3 percent to P8.84 billion. The gains were realized from servicing of matured foreign exchange obligations as well as the maturity of derivative 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 one of the worst performing currency in the region, depreciating close to six percent since the start of the year to hit a fresh 12-year low after breaching the 53 to $1 level. The local currency closed at 53.51 to $1 last Friday.

The local currency has been weakening due to strong demand for US dollar to finance importation of capital equipment and raw materials to support the expanding economy resulting to wider trade and current account deficits.

Funds also continued to flow out of the Philippines to seek higher yield amid the normalization path being undertaken by the US Federal Reserve as well as the geopolitical tensions in different parts of the globe.

The BSP books gains or losses from fluctuations in foreign exchange rates on matured, sold, paid and exchanged or settled foreign exchange assets and liabilities.

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 P22.85 billion last year, up 28.3 percent from P17.8 billion in 2016. It gained P15.48 billion from foreign exchange fluctuations.