BSP earnings up 18% in 2019

MANILA, Philippines — The net income of the Bangko Sentral ng Pilipinas (BSP) went up by 18.2 percent to a record high of P47.1 billion last year from P39.8 billion in 2018 despite the slight decline in earnings in the fourth quarter.

Data released by the central bank showed total revenues, mostly comprised of interest income on foreign investments, government securities and treasury bonds jumped by 79 percent to P121.7 billion last year from P68 billion in 2018.

The BSP earned higher interest and miscellaneous income, including trading gains or losses, fees, penalties and other operating income, among others.

On the other hand, the BSP said total expenditures went up by 34.1 percent to P86.62 billion from P65.9 billion due to a sharp rise in interest expense.

Net gains on foreign exchange rate fluctuations plunged by 72.3 percent to P14.72 billion last year from P53.11 billion in 2018. 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 BSP books gains or losses from fluctuations in foreign exchange rates on matured, sold, paid and exchanged or settled foreign exchange assets and liabilities. Its participation in the foreign exchange market is limited to temper sharp fluctuations in the exchange rate.

For the fourth quarter alone, the central bank’s net income slipped 3.6 percent to P8.45 billion from P8.77 billion in the third quarter as revenues declined by 12 percent to P26.4 billion from P30 billion.

“The lower quarterly net income was primarily the result of decreased interest income coupled with increased expenditures,” the BSP said.

It pointed out expenses increased by 16.7 percent to P24.34 billion in the fourth quarter last year from P20.85 billion in the third quarter due to higher bank note production and coin minting cost, as well as increased taxes and license fees.

Last March 26, the BSP transmitted P20 billion in advance dividend payment to the national coffers to further boost the government’s war chest versus the dreaded coronavirus disease 2019 or COVID-19 pandemic, even through its amended charter has exempted it from paying dividends to the national government.

President Duterte has signed Republic Act 11211, amending RA 7563 or the New Central Bank Act of 1993. It allowed the BSP to raise its capitalization to P200 billion from P50 billion, to be sourced from dividends declared by the BSP in favor of the national government.

The central bank remitted an all-time high P21.48 billion in dividends to the national coffers early last month in support of the government’s social programs and projects. It has transmitted more than P26.96 billion in dividends to the national government under the Duterte administration.