BSP earnings plunge 54% to P13.7 billion in H1

MANILA, Philippines — The net income of the Bangko Sentral ng Pilipinas (BSP) plunged by 54.1 percent to P13.71 billion in the first semester from P29.88 billion in the same period last year on the back of lower revenues and gains due to foreign exchange rate fluctuations.

Total revenues of the BSP, which are mostly comprised of interest income from foreign investments, government securities and Treasury bonds, fell by more than 28 percent to P46.91 billion from January to June compared to P65.32 billion in the same period last year.

The BSP’s net gain on foreign exchange rate fluctuations plummeted by 82.4 percent to P1.58 billion in the first semester from P9 billion in the same period last year.

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.

It participate in the foreign exchange market to temper the sharp fluctuations in the exchange rate.

Likewise, the BSP’s total expenditures declined by 16.4 percent to P34.63 billion from P41.43 billion due to lower interest expense on term deposit and reverse repurchase facilities.

Monetary authorities temporarily suspended the term deposit facility auctions and reduced the volume of the overnight reverse repurchase facility as part of measures to soften the blow of the pandemic.

For the second quarter alone, the net income of the BSP plunged by 77.3 percent to P3.8 billion from P16.75 billion in the same period last year as revenues fell by 46.6 percent to P20.78 billion from P38.91 billion and expenses by 27 percent to P16.4 billion from P22.48 billion.

The BSP also incurred a net loss of P441 million in the second quarter, a reversal of the net gain of P3.33 billion in the same quarter last year due to foreign exchange rate fluctuations.

Last year, the Central Bank’s net income increased by 18.2 percent to a record high of P47.1 billion from P39.85 billion in 2018 as revenues jumped by 79 percent to P121.73 billion from P68 billion, while expenses increased by only 31.4 percent to P86.62 billion from P65.9 billion.

On 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 COVID-19 pandemic even though the Central Bank’s amended charter under Republic Act 11211 has exempted it from paying dividends to the national government.

The BSP 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.