BSP incurs P7.19-B net loss in Jan-Nov 2014

MANILA, Philippines - The Bangko Sentral ng Pilipinas cut its losses as of November last year amid lower spending and a weaker peso.

The central bank recorded a net loss of P7.19 billion in the first 11 months of 2014, an improvement from the P23.48-billion loss recorded in the same period in 2013.

Data showed the BSP’s revenues fell 13 percent to P46.31 billion from P53.04 billion as miscellaneous income went down 31 percent to P16.04 billion. But interest income of the central bank increased one percent to P30.27 billion from P29.87 billion.

During the 11-month period the BSP decreased its expenses by 18 percent to P63.25 billion from P76.98 billion in the same period in 2013.

This is a result of a 22 percent fall in interest expenses to P42.28 billion from P53.96 billion, and a nine percent drop in other spending to P20.97 billion.

The decline in interest expenses can be traced to the BSP’s decision to withdraw investment management accounts (IMAs) in the Special Deposit Account facility in 2013. The central bank ordered 30 percent of the IMAs in the facility removed by July that year, while the rest was to be taken out by end-November 2013.

The BSP wanted to take out funds parked in the SDA, which was created to mop up excess liquidity in the system. This was done to encourage investors to put their money instead in activities that will benefit the economy.

SDA funds amounted to P845.041 billion as of Dec. 29, latest BSP data showed, 38 percent lower than the P1.353 trillion recorded in the same period in 2013.

Meanwhile, BSP data also showed it raked in a P9.75-billion gain from foreign exchange operations as of November, more than three times the P2.67 billion recorded in the same period a year prior.

This was due to a weaker peso for the current period as this increases the value of foreign-exchange denominated investments. Central bank data showed the peso averaged 44.37:$1 in the 11 months to November last year, depreciating from its 42.3:$1 average in the same period in 2013.

Foreign currency-denominated transactions of the central bank include re-investments of matured investments, servicing of obligations and maturity of derivatives instruments.

In end-2013, the central bank cut its net loss to P24.26 billion from a loss of P95.28 billion in 2012. The BSP last saw a net income in 2009, during which net earnings summed up to P13.13 billion.