The Bangko Sentral ng Pilipinas’ (BSP) net income dropped some more to P18.45 billion as of end-July, significantly lower by 74.67 percent compared to same period last year of P72.86 billion due to higher expenditures.
In the previous month or end-June, the BSP reported P19.86 billion in net income, also lower by 64 percent from the previous year’s P54.62 billion.
The BSP is one of the seeder-funder of the Marcos administration’s Maharlika Investment Fund (MIF). Under Republic Act No. 11954 or the MIF Act of 2023, the BSP is mandated to contribute P50 billion to the sovereign wealth fund. This amount was supposed to be part of its P200 billion capitalization which it will get from its dividends that a revised law in 2019 stated it did not have to remit until it has completed its capital buildup.
Based on BSP’s preliminary data of income and expense, its revenues increased five percent to P104.14 billion in the first seven months of 2023 from P99.15 billion same period in 2022. This was mostly interest income from international reserves and domestic securities.
Interest income rose to P109.59 billion versus P86.25 billion same time in 2022 while miscellaneous income was in the negative of P5.45 billion compared to a net gain of P12.9 billion in 2022.
Meanwhile, total expenditures grew by 78.4 percent to P119.96 billion from P67.23 billion same period last year. The BSP pay high costs for its banknotes production and coin minting cost, as well as taxes and licenses fees, and from its open market operations.
Interest expenses as of end-July increased to P94.57 billion versus P36.23 billion last year. Other expenses fell to P25.39 billion from P31 billion.
As of end-July, BSP’s foreign exchange or FX gains amounted P34.29 billion, down 16.3 percent from same time last year of P40.96 billion. FX gains are realized gains from fluctuations in FX rates arising from BSP’s foreign currency-denominated transactions.
Meanwhile, BSP’s total assets in the first seven months dropped 2.3 percent to P7.27 trillion compared to P7.44 trillion same time in 2022 because of lower loans and advances, domestic securities and other assets.
The BSP’s total liabilities also declined by 2.6 percent to P7.14 trillion from P7.33 trillion.
The BSP’s net worth as of end-July stood at P130.29 billion which was lower compared to P110.55 billion same period in 2022. Its capital reserves however went up to P70.29 billion versus P60.55 billion last year.
Last August, BSP Governor Eli M. Remolona Jr. said the central bank will remit about P62 billion in the next two years to the National Government (NG) to finance the requirements of the Maharlika Investment Corp (MIC).
Remolona said dividends worth P31 billion as NG remittance will be used as MIC capital.
Under the MIF law which created the MIC, the BSP is mandated to remit 100 percent of its dividends to the government as seed cash.
For next year, Remolona said he expects to remit the same amount to the NG for the MIC, or a total P62 billion for the two years.
The BSP will surrender part of their income to the NG even though under its revised BSP Charter, it is no longer required to remit dividends to the government starting in 2020.
After the first two years of 100 percent dividend payout to the NG, in the succeeding years, the BSP will remit 50 percent of its declared dividends to the MIC while the remaining 50 percent will go to the government until the increase in the BSP capitalization has been fully paid.
For decades since the BSP was established in 1993 from the ashes of the bankrupted Central Bank of the Philippines, the BSP only had P10 billion in capitalization, short of the P50 billion promised under the law. The entire P50 billion was given to the BSP in full 20 years later, in 2013.
In 2019, the amended BSP Charter raised its capitalization from P50 billion to P200 billion. The plan was to buildup BSP’s capitalization by not remitting dividends to the NG and keeping the money to fund its price and financial stability operations.
At the moment the BSP has a P60-billion capital. Due to the Covid-19 crisis, the BSP continued to remit to the NG in 2020, 2021 and 2022 to help in the anti-pandemic response.
In 2022, the BSP’s net income amounted to P63.73 billion, higher than 2021’s P33.98 billion.