Philippines: BSP earnings down 24% to P9.9 billion in 1st quarter

MANILA, Philippines — The net income of the Bangko Sentral ng Pilipinas (BSP) dropped by 24.5 percent to P9.9 billion in the first quarter from P13.13 billion in the same quarter last year on the back of lower gains on foreign exchange rates fluctuations.

Data released by the central bank showed total revenues, comprised of interest income on foreign investments, government securities and treasury bonds, slipped by 1.1 percent to P26.14 billion from January to March compared to P26.41 billion in the same period last year.

The BSP said revenues comprised mainly of interest income on reserves, as well as miscellaneous income, including trading gains or losses, fees, penalties and other operating income, among others.

The BSP’s net gain on foreign exchange rate fluctuations plunged by 64.3 percent to P2.02 billion in the first quarter from P5.67 billion in the same quarter last year.

The gains were realized from servicing of matured foreign exchange obligations, as well as the maturity of derivatives instruments.

This also represents realized gains arising from foreign currency-denominated transactions of the BSP, including rollover or reinvestments of matured foreign exchange investments with foreign financial institutions and foreign exchange -denominated government securities.

The BSP books gains or losses from fluctuations in foreign exchange rates on matured, sold, paid and exchanged or settled foreign exchange assets and liabilities. It participates in the foreign exchange market is limited to temper sharp fluctuations in the exchange rate.

On the other hand, the BSP said total expenditures likewise declined by 3.8 percent to P18.22 billion in the first quarter from P18.95 billion in the same quarter last year due to lower bank note production and coin minting cost as well as reduced taxes and licenses fees.

The Monetary Board has slashed interest rates by 175 basis points including the surprise 50 basis points cut last Thursday, bringing the overnight reverse repurchase rate to an all-time low of 2.25 percent, in anticipation of a more disruptive novel coronavirus disease 2019 or COVID-19 pandemic.

It also lowered the reserve requirement ratio for big banks by 200 basis points to 12 percent, freeing up P200 billion into the financial system. In all, the pandemic measures of the BSP has unleashed P1.6 trillion to help jumpstart the economy after the containment measures dragged the economy.

Last year, the central bank’s net income increased by 18.2 percent to a record high of P47.1 billion from P39.85 billion in 2018 as revenues jumped 79 percent to P121.73 billion from P68 billion while expenses increased by 31.4 percent to P86.62 billion from P65.9 billion.Last March 26, the BSP transmitted P20 billion in advance dividend payment to the national coffers to further boost the government’s war chest versus the COVID-19 pandemic, even through its amended charter under Republic Act 11211 has exempted it from paying dividends to the national government.

The central bank remitted an all-time high P21.48 billion in dividends to the national coffers early last month in support of the government’s social programs and projects. It has transmitted more than P26.96 billion in dividends to the national government under the Duterte administration.