BSP income down, posts FX loses

Published October 19, 2020, 6:30 AM

by Lee C. Chipongian

The net income of the Bangko Sentral ng Pilipinas (BSP) is down by 35.03 percent as of end-August from P33.51 billion same time last year to P21.77 billion because of lower interest income on reserves.

MB file photo.
MB file photo.

The BSP also reported net losses of P2.94 billion from foreign exchange (FX) rate fluctuations during the period. This is a reversal of the P11.03 billion net FX gains in August 2019. These are realized gains or losses from fluctuations in FX rates from the BSP’s foreign currency-denominated transactions such as FX investments, servicing of maturing obligations and derivatives.

Based on the latest unaudited central bank statement on income and expense, revenues from interest income on reserves, domestic securities and miscellaneous income for January-August came in at P71.56 billion, it was 17 percent lower year-on-year from P86.20 billion.

Interest income, which is trading gains/losses, fees, penalties and other operating income, dropped by 22.90 percent to P54.23 billion from P70.34 billion while miscellaneous income was up by 9.33 percent to P17.34 billion from P15.86 billion.

The BSP’s eight-month expenses fell by 15 percent year-on-year to P46.70 billion from P54.97 billion. Interest expenses dipped by 2.85 percent to P28.93 billion from P29.78 billion while more expenses tagged as “others” decreased by 29.45 percent to P17.77 billion from P25.19 billion.

The BSP has been reporting lower net income for the last two quarters, especially for the April to June months during the stictest community quarantine. The second quarter net income fell by 77.32 percent while the first quarter net income declined by 25 percent.

As of end-August, based on preliminary data on the BSP’s balance sheet, its total assets rose by 31 percent to P6.76 trillion from P5.16 trillion same period in 2019 mainly from the increase in its domestic securities holdings.

The BSP assets were mostly comprised of international reserves which totaled P4.76 trillion, up 6.84 percent year-on-year from P4.46 billion.

During the period, because the BSP has been purchasing government securities as part of its COVID-19 response to provide liquidity to the market, its domestic securities holdings increased by 388.68 percent to P1.22 trillion compared to just P225.49 billion same period in 2019. The tally includes the P300 billion repurchase agreement it entered into with the Bureau of the Treasury in March which was already fully paid by September 29. The BSP extended another P540 billion provisional advances this month.

BSP liabilities, in the meantime, also increased by 31 percent to P6.59 trillion from P5.03 trillion end-August 2019. These are deposits and currency issues.

The central bank’s net worth rose to P171.31 billion during the period from P130.39 billion same time last year.

It also reported a surplus/reserves position of P121.31 billion, more than the previous year’s P80.39 billion.

In recognition of its anti-pandemic actions and responses to help the government deal with the health crisis, including injecting the financial system with P1.9 trillion in liquidity, the BSP received from the Asian Banker the  “Best Systemic and Prudential Regulator in Asia Pacific” award for 2020 this week.