AT last, the Bangko Sentral ng Pilipinas (BSP) broke a five-year string of losses and in 2016 finally reported net income totaling P17.02 billion.
Data released on Thursday showed the central bank finally turning in a profit last year with net income just above P17 billion, representing a turnaround from 2015 operations when it posted net operating losses aggregating P4.45 billion.
The year’s net operating income was the highest on available record. This also enabled the central bank to bounce back to profitable operations for the first time since 2009.
The BSP has been reporting net losses since 2010, largely because of hefty interest expense and not enough income to make up for them.
This corresponded to that period when the country’s banks proved reluctant to lend on account of perceived and escalating lending risks generated in the wake of the global financial crisis.
Rather than expose themselves to risks, real or imagined, the banks would rather park funds in the vaults of the central bank where, while the returns were minimal, these were “insulated from” defaulting borrowers.
In 2012 the BSP reported a record-high net loss of P95.38 billion as a result of interest payments made on huge amounts of special deposit accounts or SDAs.
This was clear manifestation of the lenders’ collective reluctance to take risks and deploy a staggering amount of funds merely making money off the central bank and not other there in the real economy that needs it to push ahead and expand.
Such losses were trimmed by 75 percent the following year when the BSP reported a net loss of P24.26 billion as a result of a significant reduction in interest expense, following the adoption of monetary measures tending to push this much idle liquidity out of the vaults of the central bank and back to the real economy.
Much more controlled interest expenses formed part of the positive profit performance of the BSP last year, as this slowed from P48.79 billion in 2015 to P43.62 billion last year. Other expenses, meanwhile, increased to P27.57 billion in 2016, from P24.21 billion the previous year.
Revenues saw notable growth last year, rising from P56.67 billion in 2015 to P69.21 billion in 2016.
A larger portion of the revenues came from the BSP’s interest income, up from P39.29 billion in 2015 to P45.98 billion. Other miscellaneous income also went up from P17.47 billion to P23.22 billion this year.
Aside from that, the BSP also posted higher gains due to foreign-exchange fluctuations during the year, from P11.55 billion to P19.11 billion.
The BSP said the foreign-exchange gains resulted from fluctuations in foreign-exchange rates arising from foreign currency-denominated transactions of the BSP, including the rollover or re-investments of matured foreign-currency investments with foreign financial institutions and foreign currency-denominated government securities; servicing of matured foreign currency obligations of the BSP; and the maturity of derivatives instruments.