BSP’s income surges 28%

The Bangko Sentral ng Pilipinas (BSP) posted R22.85 billion in net income last year, up 28.24 percent from 2016’s R17.81 billion, the second straight year that the central bank reported gains.

Before 2016, the BSP has been in the red for six years or from 2010, after last reporting a net income of R13.13 billion in 2009. The central bank’s net worth has also declined from R171.37 billion in 2010 to R70.71 billion in 2017 as it is costly for the BSP to fulfill its mandate of price and financial stability. Its surplus reserves have also been eroded, from R164.42 billion in 2010 to R20.71 billion last year, and in 2013, 2014 and 2015, it had a negative net worth.

By law, the BSP has to share its gains – not losses – with the National Government (NG), and it has to remit 75 percent of its net income to the NG, a higher amount compared to other government-owned and controlled corporations which remit only 50 percent.

The central bank has long argued that the government should share not only BSP’s profits but also its losses. Since the BSP was established as the new central bank in 1993, it has deposited almost R160 billion in dividends and taxes to the NG.

Based on its 2017 unaudited statement of income and expenses, its net income improved because of the “higher income on international reserves, recording of demonetization income and supported by lower interest expenses.” Its foreign exchange fluctuation gains however dropped to R15.48 billion last year versus R19.12 billion in 2016.

BSP revenues last year increased to R75.6 billion from R70 billion in 2016, from the increase in miscellaneous income and interest income on international reserves and domestic securities.

Expenditures were lower at R66.9 billion from R71.2 billion from the decline in interest expense on overnight deposit facilities and reverse repurchase agreements, noted the central bank.

The BSP’s balance sheet indicated R4.66 trillion worth of total assets in 2017, more than the previous year’s P4.56 trillion, and are mainly international reserves of $81.6 billion or a little above R4 trillion. “The bulk or 80.7 percent of international reserves were composed largely of foreign investments and about 10.2 percent were in gold holdings,” said the BSP.

Liabilities went up to R4.86 trillion – these are from deposits and currency issues – from the previous year’s R4.5 trillion. The BSP had more currency issuances last year which was “partially offset by lower placements in overnight and term deposit facilities.”