BSP profit hits record P45.2 B

MANILA, Philippines — Earnings of the Bangko Sentral ng Pilipinas (BSP) more than quadrupled to hit a record P45.23 billion in the first nine months from P9.97 billion in the same period last year on the back of record gains from foreign exchange fluctuations.

Data showed revenue climbed 3.1 percent to P48.63 billion from January to September compared to P48.15 billion in the same period last year.

This was traced to the 31.7 percent surge in interest income on international reserves and domestic securities to P55.8 billion from P42.35 billion, while expenses fell by 12 percent to P44.77 billion from P50.935 billion due mainly to lower interest expenses and taxes and licenses.

However, the central bank shelled out P8.44 billion for income tax expense during the period.

The BSP recorded a net income before gains on foreign exchange fluctuations, income tax expense, and capital reserves amounting to P4.87 billion, reversing the P2.78-billion net loss booked in the same period last year.

Gains on foreign exchange fluctuations soared 281 percent to P48.8 billion from a year-ago level of P12.79 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, piercing the 54 to $1 level and hitting its lowest level in almost 14 years a few months ago. The local currency has rebounded strongly and is now trading within the 52 to $1 level.

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. It participates in the foreign exchange market is limited 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 P23.51 billion last year, 34.3 percent higher than the P17.51 billion recorded in 2016. It gained P15.48 billion from foreign exchange fluctuations.