BSP profit climbs 20% to P54.6 billion in H1

MANILA, Philippines — Gains from foreign exchange rate fluctuations boosted the earnings of the Bangko Sentral ng Pilipinas (BSP) to P54.62 billion in the first half of the year, 20.2 percent higher than the P45.44 billion recorded in the same period last year.

Preliminary data from the central bank showed it booked a net gain of P27.21 billion from foreign exchange fluctuations from January to June compared to only P5 million 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. Its participation in the foreign exchange market is limited to temper sharp fluctuations in the exchange rate.

The peso has gained more than six percent as it pierced the 54 to $1 due to the hawkish US Federal Reserve, the impact of Russia’s invasion of Ukraine on global oil and commodity prices, and soaring interest rates in the country.

The local currency has slumped by 15.7 percent and closed at an all-time low 59 to $1 several times last October before bouncing back to the 57 to $1 level as the BSP remained active in the foreign exchange market to smoothen the volatility of the peso as well as the commitment of the central bank to match point by point the aggressive rate hikes by the US Federal Reserve.

To stabilize the peso and tame inflation, the central bank’s Monetary Board has so far raised key policy rates by 225 basis points to bring the overnight reverse repurchase rate to 4.25 percent from an all-time low of two percent and is poised to deliver another huge 75-basis point hike on Thursday.

The gains from foreign exchange fluctuations were enough to erase the 11.4 percent decline in revenues mostly comprised of interest income on foreign investments, government securities and Treasury bonds to P84.96 billion in the first half of the year from P95.93 billion.

Interest earnings jumped by 29.9 percent to P70.89 billion from P54.56 billion.

However, miscellaneous income including trading gains or losses, fees, penalties and other operating income, among others plunged by 66 percent to P14.07 billion.

On the other hand, the total expenses of the BSP went up by 13.8 percent to P57.53 billion as other expenses grew by 34.9 percent to P28.02 billion while interest expense slightly slipped to P29.51 billion from P29.78 billion.

Last year, BSP’s profit grew by 32.7 percent to P42.11 billion on the back of higher trading gains and operating income as well as massive gains from foreign exchange transactions.

The central bank’s total revenues jumped by 41.3 percent to P166.98 billion last year while expenditures surged by 68.8 percent to P136.01 billion.