The Bangko Sentral ng Pilipinas (BSP) posted a net income of P95.2 billion for the first seven months of 2024, a huge 414.59 percent increase compared to same period last year of P18.5 billion due to higher revenues while its expenditures contracted.
Based on its latest statement of income and expense, the BSP increased its revenues by 57.1 percent to P190.6 billion as of end-July from P121.3 billion in 2023.
BSP revenues are from its interest income derived from international reserves and domestic securities. Interest income increased by 28 percent to P140.4 billion during the period from P109.6 billion last year.
Miscellaneous income surged 329 percent to P50.2 billion versus P11.7 billion same time in 2023. Miscellaneous income includes trading gains/losses, fees, penalties, and other operating income, among others.
BSP expenses for the first seven months totaled P125.7 billion, down by 8.3 percent compared to same time last year of P137.1 billion. 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 reached P98.4 billion, up by four percent from P94.6 billion in 2023 while other expenses such as net trading losses totaled P27.4mbillion, down 35.5 percent from P42.5 billion last year.
Meanwhile, BSP’s foreign exchange or FX gains fell by 11.37 percent to P30.4 billion compared to same time last year of P34.3 billion. The central bank’s FX gains are realized gains from fluctuations in FX rates arising from its foreign currency-denominated transactions.
Based on the latest statement on assets and liabilities, the BSP had total assets of P7.954 trillion as of end-July. This was 9.4 percent higher than end-July 2023 of P7.271 trillion.
BSP’s assets are expanding because of higher international reserves and holdings of derivative instruments. International reserves accounted for bulk of BSP assets. As of end-September, the Philippines has gross international reserves of $112.7 billion which was a record high.
Total liabilities, on the other hand, rose 8.2 percent to P7.723 trillion versus P7.141 trillion last year. BSP’s net gain from FX rate fluctuations and higher miscellaneous income contributed to total liabilities.
As of end-July, BSP’s net worth totaled P230.9 billion, up by 77.2 percent from last year’s P130.3 billion, boosted by surplus reserves.
During the period, surplus reserves reached P170.9 billion, up by 143 percent from same time in 2023 of P70.3 billion.
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 when the law requires it to have P50 billion. 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 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), 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.