BSP profit down 14.5% in 9 months

The net income of the Bangko Sentral ng Pilipinas (BSP) declined by 14.5 percent to P38.65 billion in the first nine months from P45.23 billion in the same period last year amid higher expenses and lower gains from foreign exchange transactions.

Data released by the central bank showed total revenues mostly comprised of interest income on foreign investments, government securities and treasury bonds almost doubled to P95.32 billion from January to September compared to P49.63 billion in the same period last year.

Interest income surged by 40.3 percent to P78.29 billion from P55.8 billion, while miscellaneous income including trading gains or losses, fees, penalties and other operating income, among others amounted to P17.03 billion reversing the P6.16 billion losses last year.

The BSP has partially reversed its tightening cycle that saw interest rates rise by 175 basis points last year as inflation accelerated to 5.2 percent from 2.9 percent in 2017 due to elevated oil and food prices as well as weak peso.

The central bank slashed interest rates thrice with a cumulative 75 basis points so far this year due to the continued inflation downtrend as well as weaker than expected gross domestic product (GDP) growth.

On the other hand, the BSP said total expenditures went up by 39 percent to P62.28 billion from January to September compared to P44.77 billion in the same period last year.

This as interest expense jumped by 61.3 percent to P33.72 billion from P20.9 billion.

Net gains on foreign exchange rate fluctuations plunged by 70.5 percent to P14.37 billion from P48.8 billion. 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 re-investments of matured foreign exchange investments with foreign financial institutions and foreign exchange -denominated government securities.