BSP swung to operating profit of P8.7B in 2017
The Bangko Sentral ng Pilipinas registered a large operating profit in 2017, reversing an operating loss it had incurred in the previous year due to the cost of mopping up excess liquidity in the local financial system—the price of keeping domestic inflation under control.
In its recent published annual report, the country’s central monetary authority and bank regulator said its pretax and preforeign exchange adjustment income hit P8.7 billion for last year.
This was a marked improvement from the P1.2-billion loss it reported in 2016, when it was hobbled by P19.9 billion worth of interest payments to banks that deposited their excess funds in the BSP’s short-term special deposit account (SDA) window.
Factoring in gains from foreign exchange fluctuations, the central bank’s net income hit P22.8 billion at the end of 2017, representing a 28.2-percent increase from the P17.8-billion earnings at the end of the previous year.
“Net income was composed primarily of higher income on international reserves, recording of demonetization income and supported by lower interest expenses,” the central bank said in its report published late last week.
Going forward, however, central bank officials earlier noted that the cost of fighting inflation, as denoted on the BSP’s income statement, would shift to another item as regulators replaced the SDA with term deposit facilities as their preferred method of immobilizing excess—and inflationary—cash in the financial system.
Total revenues for 2017 amounted to P75.6 billion, higher than the P70 billion posted in the previous year. The growth in total revenues was due mainly to the increase in miscellaneous income and interest income on international reserves and domestic securities.
Total expenditures amounted to P66.9 billion, lower than the P71.2 billion posted last year. The year-on-year decrease in expenditures was due mainly to the drop in interest expense on overnight deposit facilities and reverse repurchase agreements.
