The Bangko Sentral ng Pilipinas (BSP) posted a net income of P21.59 billion for the first 10 months of 2023, down by 75.44 percent compared to same period in 2022 of P87.92 billion due to the contraction of miscellaneous income and also from higher expenses.
The BSP, one of the mandated seed money contributors to the Maharlika Investment Corp. (MIC), increased its revenues by 24.9 percent to P145.1 billion as of end-October from P116.12 billion in 2022.
BSP revenues came from its interest income from international reserves and domestic securities. Interest income increased by 29.79 percent to P162.98 billion from P125.57 billion.
On the other hand, miscellaneous income continued to contract to P17.89 billion, versus a P9.44 billion decline last year.
Meanwhile, total expenditures increased by 65.9 percent to P174.48 billion as of end-October from P105.17 billion same time 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.
During the period, interest expenses rose by 119.19 percent to P138.77 billion from P63.31 billion. Other expenses however fell by 14.71 percent to P35.71 billion versus P41.87 billion same time in 2022.
Based on BSP data as of end-October, its foreign exchange or FX gains dropped to P51 billion, or down by 33.75 percent from 2022’s P76.99 billion. FX gains are realized gains from fluctuations in FX rates arising from BSP’s foreign currency-denominated transactions.
The BSP also reported that total assets for the January to October period grew by 2.3 percent to P7.483 trillion from P7.314 trillion in 2022.
Total liabilities likewise rose 1.9 percent to P7.363 trillion from P7.228 trillion.
The BSP’s net worth as of end-October was up at P119.8 billion compared to P85.35 billion same time in 2022. The net worth was higher because of surplus reserves of P59.8 billion, more than the previous year’s P35.35 billion.
As of end-October 2023, the BSP’s capital remains at P60 billion only, short of the P200 billion it had to have under the BSP Charter as amended in 2019.
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 first BSP 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 National Government (NG) and keeping the money to fund its price and financial stability operations.
However, when the Marcos administration came up with the Maharlika Investment Fund (MIF) which will be managed by the MIC, the MIF law mandated the BSP to divert its dividends as seed money to the sovereign wealth fund.
This postpones the buildup of the BSP capitalization but central bank officials believe they can afford the delay.
Based on the MIF law, which created the MIC, the BSP is mandated to remit 100 percent of its dividends to the government as seed cash. 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.