By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK saw its net income rise fourfold as of October, driven by huge gains from foreign exchange at a time of a weaker peso.
The Bangko Sentral ng Pilipinas (BSP) made P48.33 billion in the first 10 months of the year, surging from the P12.38 billion booked in the comparable 2017 period, latest data showed.
Total revenues posted a modest 4.6% increase to hit P55.79 billion at end-October, coming from P53.35 billion a year ago. This came after interest income surged by roughly a third to reach P62.67 billion, but was cancelled out by a net loss of P6.89 billion from miscellaneous sources.
This is a reversal of the P5.65 billion profit last year from fees and penalties collected from banks and other supervised financial firms.
On the other hand, the BSP generated more savings by streamlining its operating costs, which declined by a tenth to P50.29 billion from P55.82 billion the previous year.
Interest expenses also dropped by 23.6% to P23.49 billion, while other spending posted a seven percent climb to P26.8 billion, according to data posted on the BSP website.
Operating revenues netted a P5.5-billion profit, which was boosted by trading gains worth P51.28 billion. Income from currency trades more than tripled from the P14.92 billion generated as of October 2017, just as the peso plunged to 12-year lows versus the dollar.
The local unit traded above P54 versus the greenback in early October, driving the monthly average weaker to P54.0086 versus the P51.3433 rate seen a year ago.
The BSP conducts “tactical intervention” during the daily peso-dollar trading, in line with their mandate of price and financial stability. A weaker peso usually means big gains for the BSP, given that a big chunk of its assets and investments are expressed in dollars.
The BSP also spent P8.44 billion to settle income taxes so far this year, versus the P80 million it shelled out the prior year.
Central bank officials are expecting Congress’ proposal to update the BSP charter to improve their operations and boost their bottom line further, as the measure seeks to grant tax exemptions for governmental functions.
The Senate and the House of Representatives have finalized a bill updating the New Central Bank Act passed back in 1993, which is now awaiting President Rodrigo R. Duterte’s signature.
BSP Deputy Governor Diwa C. Guinigundo said the central bank is looking forward to its signing into law, as the measure will also grant an additional P150 billion capital and will allow the central bank to set up reserves for foreign exchange fluctuations.
The central bank is on track to remain in the black for the third straight year, and appears to be headed towards a banner year. The BSP has recovered from six straight years of losses after posting a P17.51 billion profit in 2016, followed by a P23.51 billion net income in 2017.