Weak peso arrests BSP losses at end-Sept.

THE CENTRAL bank’s losses narrowed at the end of September this year as revenues rose significantly, outpacing the increase in expenses, data released this month showed.

If the trend holds, the Bangko Sentral ng Pilipinas (BSP) will post its sixth-consecutive yearly loss, although the end 2015 result will likely be the regulator’s best since 2010.

The BSP posted a net loss of P3 billion for the January to September period, better than the P5.28-billion loss during the same nine months of 2014.

A weaker peso helped the BSP arrest its bleeding. Before changes due to foreign exchange fluctuations are applied, the BSP’s losses stand at P10.65 billion.

The local currency’s weakness inflates the value of the BSP’s dollar-denominated assets, helping pad revenues.

From 2010 to 2014, the BSP’s losses have totaled P224.47 billion. The bleeding peaked in 2012, when the BSP lost P95.38 billion, the highest annual loss in the central bank’s history.

The last time the BSP was in the black was 2009, when it saw a profit of P13.13 billion.

These losses were caused mainly by the buildup in the amount of cash stashed in Special Deposit Accounts (SDAs), one of the main tools the BSP uses to siphon cash from the economy. The BSP’s main task is to protect consumers’ purchasing power by keeping prices stable.

SDA rates are adjusted by monetary authorities depending on their assessment of domestic liquidity conditions.

Rates are raised to encourage banks to keep more cash idle in BSP vaults, while rate reductions are done to push more money out into the economy. As a result, the BSP’s expenses rise when more money is parked in SDAs.

For January to September, the bank’s revenues stood at P43.19 billion, up 19 percent year-on-year. Expenses reached P53.84 billion, rising 6.5 percent.

Interest income grew to P28.42 billion from last year’s P23.83 billion, while miscellaneous income, which the BSP gets from regulatory fees, rose to P14.77 billion from P12.35 billion.