BSP posts record high net profit
THE CENTRAL BANK posted a record high income in 2016 to end six years of losses, on the back of higher interest and trading gains coupled with lower operating costs.
The Bangko Sentral ng Pilipinas (BSP) booked a P17.02-billion bottom line last year, the highest it ever incurred, which reversed six straight years of being in the red, according to its unaudited financial statement posted on the central bank’s Web site.
Total revenues reached P69.21 billion, which jumped by 22.1% from the P56.67- billion haul in 2015. Interest payments rose by 17.3% to P45.98 billion, while profits from miscellaneous fees surged by a third to reach P23.22 billion.
The central bank also posted a record figure in foreign currency trading gains at P19.11 billion, jumping from P11.55 billion a year ago.
The peso touched fresh eightyear lows during the last three months of 2016, reflecting market uncertainty ahead of looming rate hikes from the US Federal Reserve and the surprise win of now President Donald J. Trump, among other developments.
As the country’s sole monetary authority, the BSP sometimes steps in during the daily currency trading to temper any sharp movements of the peso versus the dollar.
BSP Deputy Governor Diwa C. Guinigundo previously said a weaker peso actually spelled gains for the central bank, as the BSP’s investments are expressed in dollars.
The BSP’s rising profits came alongside lower operating expenses at P71.19 billion, representing a 2.5% decline from the P73 billion it spent a year ago.
In June last year, the BSP migrated to an interest rate corridor scheme which makes use of a weekly term deposit auction and a daily standing facility for overnight deposits which may be tapped by banks and trust firms. This came alongside procedural cuts in the benchmark borrowing rates, with the policy rate now at 3% from 4% previously.
The BSP also received a P500 million payment from Rizal Commercial Banking Corp. (RCBC) in August, representing half of the penalty imposed by the BSP for its misdeeds that led to the transfer of $81 million stolen from the Bangladesh Bank’s reserve account in New York.
The funds from the central bank passed through four bogus accounts in RCBC’s branch along Jupiter Street in Makati, where the money was withdrawn and sent to casinos where the money trail turned cold.
Of the sum, only $15 million has been returned to Bangladesh so far.
Overall, the BSP was able to turn around from a P4.45 billion loss incurred in 2015. The BSP has been in the red since 2010, with losses reaching a peak of P95.38 billion in 2012.
The central bank has revived its proposal to put up its own reserves to cushion foreign currency fluctuations under its proposal to update Republic Act 7653 or the New Central Bank Act through bills referred to Congress. Under the measures, the BSP is also looking to raise its authorized capital to P200 billion from P50 billion, which if approved would allow the BSP to take on more activities and investments to sustain its operations.