GSIS H1 net income falls 68% to P29.7B

The net income of state-run pension fund Government Service Insurance System declined by more than 68 percent to P29.7 billion in the first half, off-setting the one-time gains from the shift to fair value accounting that bolstered last year’s end-June profit to P94 billion.

In a press conference, GSIS president and general manager Robert G. Vergara said on Thursday that first half revenue was about P70 billion, down from P135 billion a year ago.

Revenue from members’ contribution for their social insurance rose by 5 percent to P45 billion, as an additional 100,000 personnel were hired by the government in the past 12 months.

Vergara said the volatility in financial markets had resulted in lower revenue from financial assets, dragging total revenue.

“We’re slightly below target because in the first half, the equity and fixed income markets continue to underwhelm. The shortfall is being made up by returns on investments,” he said.

“There are some packets of revenue from other assets that GSIS runs that can make up for the deficit in capital markets,” Vergara said.

As of end-June, GSIS’ investment portfolio amounted to P874 billion, of which P410 billion was in fixed income securities, P220 billion in loans, P158 billion in equity holdings, P57 billion in cash, and P32 billion in real estate.

Vergara disclosed that the GSIS board this month would likely jack up to 30 percent the ceiling for equity holdings from just 20 percent at present. To date, equity investments account for 18.5 percent of the total.

The GSIS chief said it might still take “a couple of years” before the share of equity holdings in the total investment portfolio would reach 30 percent.

As for the GSIS’ loan book, it was “not growing” and hit only P10.5 billion as of end-June, Vergara said, citing that interest rates were “pretty static.” He, however, expects loans to members to rise to about P22 billion by the end of the year as the pension fund had allowed members to borrow more than they could previously do.

Total expenses were flat at P41.4 billion in the first semester, of which the bulk or P38 billion were benefits and claims paid to GSIS’ more than 1.5 million active members and about 400,000 pensioners.