BSP earnings decline 35% from January to August

MANILA, Philippines — The earnings of the Bangko Sentral ng Pilipinas (BSP) dropped by 35 percent to P13.71 billion from January to August compared to P33.51 billion in the same period last year due to lower revenues and net loss on foreign exchange rate fluctuations.

According to the BSP, its revenue comprised mostly of interest income on foreign investments, government securities and treasury bonds declined by 17 percent to P71.56 billion during the eight month period from P86.2 billion in the same period last year.

Likewise, the BSP reported a 15 percent drop in expenditures to P46.7 billion from January to August compared to P54.97 billion in the same period last year due to lower interest expense on term deposit and reverse repurchase facilities.

As part of response measures to COVID-19, monetary authorities temporarily suspended the Term Deposit Facility (TDF) auction and slashed the volume of the overnight reverse repurchase facility to address the liquidity needs amid the crisis.

The COVID-19 response measures of the BSP have unleashed P1.9 trillion into the financial system.

On the other hand, the BSP booked a net loss of P2.94 billion from foreign exchange rate fluctuations arising from servicing of matured foreign exchange obligations, maturity of derivatives instruments, as well as rollover or re-investments of matured foreign exchange investments with foreign financial institutions and foreign exchange-denominated government securities.

This was a complete turnaround from the P11.03 billion gain made in the same period last year.

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 to temper sharp fluctuations in the exchange rate.

Last year, the BSP’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 31.4 percent to P86.62 billion from P65.9 billion.

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 COVID-19 pandemic, even though its amended charter under Republic Act 11211 has exempted it from paying dividends to 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.