BSP profit down 26% to P34.5 B

The earnings of the Bangko Sentral ng Pilipinas (BSP) plunged by 25.5 percent to P34.53 billion last year from a record high P46.41 billion in 2019 on the back of lower revenues and net loss on foreign exchange rate fluctuations.

Revenues of the BSP, comprised mostly of interest income on foreign investments, government securities and Treasury bonds, declined by 2.8 percent to P118.22 billion last year from P121.67 billion in 2019.

Likewise, the BSP incurred a double-digit 10.9 percent decrease in expenditures to P77.79 billion from P87.33 billion due to lower interest expense on term deposit and reverse repurchase facilities.

To cushion the impact of the pandemic on the economy, monetary authorities temporarily suspended the term deposit facility (TDF) auction and slashed the volume of the overnight reverse repurchase facility to address the liquidity needs amid the health crisis.

The BSP also incurred a net loss of P5.78 billion from foreign exchange rate fluctuations arising from the servicing of matured foreign exchange obligations, maturity of derivatives instruments, as well as rollover or re-investments of matured foreign exchange investments with foreign financial institutions and foreign exchange-denominated government securities.

The P5.78 billion loss was a complete turnaround from the P14.72-billion gain made in 2019.

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.