THE CENTRAL BANK saw its net income surge anew in July, raking in huge gains from foreign currency trading at a time of a weaker peso.
Latest data showed that the Bangko Sentral ng Pilipinas (BSP) booked a P33.07-billion bottom line for the first seven months, a nearly fourfold increase from the P8.5-billion net income posted from January-July 2017.
Gross revenues totalled P42.53 billion, up 12.1% from the P37.96 billion secured during the comparable seven-month period. Broken down, interest income surged to P42.61 billion, which offset a P70-million loss from miscellaneous fees.
On the other hand, the central bank pared down operating costs to P34.33 billion. This is 15.5% lower than the P40.61 billion expenses recorded a year ago. Of the amount, P15.59 billion has been spent on interest payments.
This yielded a gross income of P8.2 billion from the central bank’s core operations, reversing a P2.65-billion loss during the comparable year-ago period.
However, profits from foreign exchange trading pulled the BSP’s bottom line to a record high as it made P24.89 billion from currency fluctuations. This is double the P11.19 billion net gain from fluctuating peso-dollar valuations as of July last year.
The BSP conducts “tactical intervention” during the daily peso-dollar trading to fulfill its mandate of price and financial stability. The central bank taps reserve money to buy or sell more dollars and smooth out any sharp swings that may cause a sudden appreciation or depreciation of the peso.
The local unit traded above the P53 level against the greenback that month to average P53.4329, weaker than the P50.6382 rate in July 2017. Year-to-date, the peso has depreciated by around eight percent, reeling from excessive volatility and negative market sentiment towards emerging markets.
A weaker peso actually spelled gains for the BSP, given that a big chunk of its assets and investments are expressed in dollars.
The central bank stands on track to remain in the black for the third straight year and appears headed to a banner year.
The BSP has recovered from six straight years of a net loss after it posted a P17.51 billion profit in 2016, followed by a P23.51 billion net income in 2017.
This comes even after the central bank started paying bigger margins for placements under the term deposit facility, which has been their main tool for open market operations since June 2016. The BSP pays interest to banks for parking their idle funds under one-week, two-week and month-long tenors.
Accepted yields under the window have been on the rise following successive tightening moves from the Monetary Board, with current benchmark rates ranging from 3.5-4.5%. — Melissa Luz T. Lopez