BSP losses narrowed in 2014 to P11.31B

MANILA, Philippines–The central bank booked its fifth consecutive year in the red in 2014 as expenses, although lower, remained elevated, data released this week showed.

Gains from foreign exchange movements, which were at their highest in more than a decade, were not enough to wipe out the Bangko Sentral ng Pilipinas’ (BSP) losses last year.

Last year’s net loss came amid volatility in the peso’s value, which usually forces the central bank to use up resources through the buying and selling of dollars in the open market.

In 2014, the BSP reported a net loss of P11.31 billion from P25.05 billion the year before. Even as it ended the year in the red, the BSP’s financial performance in 2014 was still its best since 2009, the last time profits were made for a full year.

The BSP’s total revenues for the year dipped 11.2 percent to P50.26 billion. Interest income, which comes from the BSP’s investments, was up slightly to P33.28 billion but miscellaneous income from items such as regulatory fees paid by supervised institutions declined by more than a third to P16.7 billion.

There was a 17-percent decrease in expenses, but the total was still a larger P70.50 billion.

A gain of P8.94 billion due to foreign exchange fluctuations was realized during the year. Due to the dollar’s strength, the peso value of foreign-denominated assets held by the bank increased.

Following last year’s performance, the BSP has lost a total of P224.50 billion in the last half decade, data showed.

Due to its vital role in ensuring the stability of the Philippine economy, the BSP has repeatedly sought for an increase in capitalization from the national government.

Last year, the BSP’s intended capital of P50 billion, a number set in 1993, was finally filled up by the state.

Given the growth of the economy over the last decade, there have been several proposals in Congress to increase the BSP’s capital to P200 billion.

The BSP also wants power to issue its own debt instruments and be exempted from certain taxes.

Both measures would help improve the BSP’s financial performance.

In the last five years, the BSP’s losses rose to record highs as banks parked more cash in special deposit accounts (SDA).

This raised the amount of interest the BSP had to pay.

Interest expenses may rise again this year following the decision to raise SDA rates from record lows last year to manage the country’s money supply.

This would encourage banks to keep more cash in BSP vaults.–Paolo G. Montecillo