BSP posts higher profit in 2022 as FX gains rise

THE BANGKO SENTRAL ng Pilipinas (BSP) booked higher net earnings in 2022, driven by an increase in net gains from foreign exchange (FX).

The BSP’s net income stood at PHP 83.82 billion last year, more than double (141%) the PHP 34.72 billion posted in 2021, its latest unaudited statement of income and expense showed.

The central bank recognized PHP 83.36 billion in net gains from FX rate fluctuations in 2022, significantly higher than the PHP 3.26-billion net gain it posted a year earlier.

The BSP records realized gains or losses from foreign exchange rate fluctuations on matured, sold, paid and exchanged or settled FX assets and liabilities.

Last year, the peso hit a new all-time low of PHP 59 against the dollar, which was last seen in October. The local currency has since rebounded, closing at PHP 54.675 versus the greenback on Monday.

The central bank posted revenues of PHP 141.3 billion in 2022, lower by 14.8% from the PHP 165.89 billion posted in the same period a year earlier.

Its revenues mostly came from interest income on foreign investments and government securities.

Interest income rose by 32.7% to PHP 153.22 billion from PHP 115.45 billion in 2021.

Miscellaneous income — which includes trading gains, fees, penalties, and other operating — was at a PHP 11.91-billion loss in 2022 versus the PHP 50.44-billion gain a year prior.

The central bank’s expenses were at PHP 140.79 billion last year, higher by 28.8% from PHP 109.33 billion in 2021. Its expenses included banknote production and coin minting costs, as well as taxes and license fees.

Interest expense also climbed by 41.9% to PHP 85.63 billion from PHP 60.34 billion. Other central bank expenses amounted to PHP 55.16 billion, up by 12.6% from PHP 48.99 billion in 2021.

Total assets held by the BSP went down by 4.3% to PHP 7.248 trillion in 2022 from PHP 7.576 trillion a year prior.

The bulk of these assets are international reserves, which the central bank used to mitigate volatility in the foreign exchange market last year. BSP data showed the country’s dollar reserves fell by 11.6% to USD 96.1 billion as of end-2022 from the USD 108.8 billion recorded as of end-2021.

Liabilities of the central bank dropped by 4.1% to PHP 7.137 trillion from PHP 7.44 trillion a year earlier. These included the BSP’s term deposit facility and the overnight deposit facility, as well as currency issues.

The BSP’s net worth amounted to PHP 110.87 billion in 2022, falling by 18.6% from PHP 136.22 billion a year prior due to reduced surplus or reserves.

Its surplus or reserves dropped by 40.9% to PHP 50.87 billion last year, from PHP 86.22 billion in 2021.

The central bank’s surplus is mainly composed of BSP’s unrestricted retained earnings as well as capital reserves, or the funds set aside for various contingencies. 

It also includes unrealized gains or losses on its investments in government securities, stocks and other securities, the BSP said. — Keisha B. Ta-asan