Bangko Sentral posted net loss of P24.8B in Q1
By Doris Dumlao
Philippine Daily Inquirer
First Posted 18:26:00 05/18/2008
MANILA, Philippines--The Bangko Sentral ng Pilipinas (the Philippine central bank) reported a net loss of P24.8 billion for the first quarter, about six times the losses recorded in the same period last year.
Based on its latest unaudited financial statement, the BSP generated a much higher operational income of P3.68 billion from January to March, versus the P1.07 billion a year ago, as the growth in revenue outpaced the increase in expenses.
However, the growth in operational income was not enough to cover the foreign exchange losses incurred in a bid to temper the appreciation of the peso.
The BSP said foreign exchange losses in the first quarter reached P28.4 billion, much higher than the P5.16 billion in forex losses incurred a year ago, as the peso gained ground against the dollar for most of the first quarter.
In the first quarter of 2007, the BSP registered a net loss of P4.09 billion.
The central bank, which has a "long" (buy) position on US dollars, given its rising stock of gross international reserves, books losses when the local currency is appreciating. As of end-March, the BSP has accumulated $36.6 billion in GIR.
Starting March, however, the peso's appreciation was halted by combined risk aversion caused by rising inflation in Asia as well as a looming US-led global slowdown. Last Friday, the peso closed at 42.80, about 3 percent weaker than the end-2007 level of 41.28 against the dollar.
For the first quarter, the BSP's revenue rose by 60.1 percent to P22.81 billion from year-ago level. Expenses rose 45.2 percent to P19.13 billion. Interest expense increased by 2.52 percent to P16.61 billion over a year ago. This situation of incurring losses due to foreign exchange fluctuations, however, is not unique to the BSP. In a recent presentation to Congress, the BSP cited the following:
- Norway's central bank Norges Bank recorded net losses of Nkr 4.7 billion and Nkr 24 billion in 2001 and 2002, respectively.
- Bank of Thailand incurred net losses of Bt 1.7 billion and Bt 102.3 billion in 2005 and 2006, respectively. It is now in consultation with government agencies regarding its capital level and rules on profit distribution.
- Bank of Korea incurred net losses of 1.9 trillion and 1.8 trillion won in 2005 and 2006, prompting the government to issue 20 trillion won worth of treasury bonds for the stabilization of the foreign exchange market in 2006.
The BSP, however, will soon get P40 billion in fresh capital infusion from the national government, which will create a special purpose trust that shall raise the funds through bonds payable in 10 years.
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