BSP net income down 64% in H1

At a glance

  • The Bangko Sentral ng Pilipinas (BSP) posted a net income of P19.86 billion for the first six months, down 63.64% from P54.62 billion same time in 2022.

  • As of end-June, BSP's foreign exchange (FX) gains amounted to P31.81 billion, up 16.9% from same time last year of P27.21 billion.

  • BSP revenues reached P90.63 billion while expenses totaled P102.58 billion in the first half of 2023.

The Bangko Sentral ng Pilipinas (BSP), one of the mandated seed money contributors to the Maharlika Investment Corp. (MIC), reported a net income of P19.86 billion for the first six months of the year, 63.64 percent lower compared to same time in 2022 of P54.62 billion.

Based on BSP’s preliminary data which was released Saturday, Sept. 16, the independent government financial institution registered a net income of P21.3 billion in the second quarter, reversing the P1.4 billion net loss in the first quarter this year. But the April to June net income was still lower than the P31.1 billion reported same time in 2022.

“The net income for the review period was due to higher interest income from international reserves and gains from foreign exchange (FX) rate fluctuations,” said the BSP in a quarterly report.

As of end-June, BSP FX gains amounted to P31.81 billion, up 16.9 percent from same time last year of P27.21 billion. FX gains are realized gains from fluctuations in FX rates arising from BSP’s foreign currency-denominated transactions.

For the first half of 2023, the central bank reported revenues of P90.63 billion, up 6.7 percent from P84.96 billion last year. This was mostly interest income from international reserves and domestic securities.

Interest income stood at P93.41 billion which was higher than P70.89 billion in 2022 by 31.77 percent while miscellaneous income declined to P2.78 billion compared to P14.07 billion same period last year.

Meanwhile, total expenditures increased by 78.3 percent to P102.58 billion as of end-June from P57.53 billion in 2022. 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 in the January to June period surged by 171.6 percent to P80.15 billion from P29.51 billion. Other expenses amounted to P22.43 billion, down 19.95 percent versus P28.02 billion in 2022.

Preliminary data also showed that the BSP’s total assets in the first six months decreased by 0.9 percent to P7.294 trillion from end-March’s P7.36 trillion because of lower loans and advances, domestic securities and other assets. Compared to same period in 2022, total assets declined by 2.1 percent from P7.449 trillion.

The BSP’s total liabilities likewise declined by 1.2 percent to P7.126 trillion from end-March’s P7.216 trillion and by 3.3 percent from same time last year of P7.373 trillion.

The BSP’s net worth as of end-June was at P167.34 billion, higher than same period last year of P76.36 billion. The net worth was higher because of surplus reserves of P107.34 billion.

Last month, the BSP announced that it will remit about P62 billion in the next two years to the National Government (NG) to finance the requirements of the MIC.

BSP Governor Eli M. Remolona Jr. said dividends worth P31 billion remitted to the NG will be used as MIC capital.

He said the P31 billion is dividend payment for “this year” but did not clarify if this was advance cash for the period 2023 or additional remittance for 2022. Under the Maharlika Investment Fund 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 new BSP chief, who became the central bank’s seventh governor only on July 3, said they can afford to 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.

Remolona said the BSP’s financial standing at the moment, is in “very good shape” and that they “don’t really need that money.”

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. The combined Covid-related NG deposits amounted to about P50 billion.

In 2022, the BSP’s net income reached P63.73 billion. This is the amount on record as of Sept. 16, 2023 data. This was higher from 2021’s P33.98 billion, also as of the latest version of BSP’s computation of its statement of income and expense.