BSP profit plunges 71% in 8 months

MANILA, Philippines — The earnings of the Bangko Sentral ng Pilipinas (BSP) plunged by 71 percent to P22.91 billion from January to August versus last year’s P78.82 billion as expenses soared.

Preliminary data showed the total revenue of the central bank, mostly comprised of interest income on foreign investments, government securities and treasury bonds, went up by 2.1 percent to P117.13 billion from P114.72 billion a year ago.

During the eight-month period, the BSP’s interest earnings rose by 23.1 percent to P127.52 billion from P103.57 billion.

On the other hand, miscellaneous activities, such as trading gains or losses, fees, penalties and other operating income, among others recorded a net loss of  P10.4 billion,  a reversal of  last year’s gains amounting to P11.15 billion.

Likewise, the total expenses of the central bank surged by 75.9 percent to P137.87 billion from P78.37 billion as interest expenses reached P109.67 billion, 2.5 times last year’s P44.47 billion.

The BSP reported a 2.7-percent rise in gains from foreign exchange fluctuations during the eight-month period  to P43.67 billion versus a year-ago level of P42.5 billion.

The profit of the BSP reached a record-high level of P63.73 billion in 2022, 1.9 times the P33.98 billion booked in 2021. This developed after the central bank tallied a net gain of P67.66 billion from foreign exchange fluctuations last year, 20.7 times the P3.26 billion recorded the previous year.

Under Republic Act 11954 or an act establishing the Maharlika Investment Fund signed by President Marcos in July, the BSP is mandated to contribute 100 percent of its total declared dividends as computed under RA 7653 or the New Central Bank Act in the first two years of the fund.

In the succeeding years after the first two years of 100 percent dividend payout to the national government, the BSP will remit 50 percent of its declared dividends to the MIF while the remaining 50 percent will go to the national coffer until the increase in the BSP capitalization to P200 billion from P50 billion has been fully paid.

BSP Governor Eli Remolona Jr. said the central bank is set to remit about P62 billion to the national government over the next two years to bankroll the MIF.

Remolona earlier signed a memorandum order for the release of P31 billion worth of dividends to the government to be used as MIF capital and is set to remit the same amount next year.

So far, government financial institutions led by the Land Bank of the Philippines contributed P50 billion to the MIF, while the Development Bank of the Philippines  chipped in P25 billion.