BSP earns record P33 billion in 7 months

MANILA, Philippines — Earnings of the Bangko Sentral ng Pilipinas (BSP) almost quadrupled to an all-time high of P33.1 billion in the first seven months from P8.5 billion in the same period last year on the back of higher revenues, lower interest expense, and record gains from foreign exchange fluctuations.

Data showed the central bank posted a double-digit growth of 12.1 percent in revenues to P42.53 billion in the first seven month from P37.96 billion a year ago due primarily to the 31.55 percent increase in interest income on international reserves and domestic securities to P42.61 billion from P32.29 billion.

On the other hand, expenses fell by 15.5 percent to P34.33 billion from January to July compared to P40.61 billion in the same period last year due mainly to 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 P8.2 billion in the first seven months, reversing the P2.65-billion net loss incurred in the same period last year.

Gains on foreign exchange fluctuations surged by 122 percent to P24.89 billion from a year-ago level of P11.19 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 third worst performing currency in the region, depreciating eight percent since the start of the year to pierce the 54 to $1 level.

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