The Bangko Sentral ng Pilipinas (BSP) said it has slashed its operational losses in 2015 by more than half from a year earlier due to a stronger peso.
The central bank recorded a net loss of P4.3 billion from its operations, traced largely to the cost of its open market activity and foreign exchange fluctuations. This compares with P10.11 billion in net losses posted for 2014.
This is the sixth consecutive year that the central bank incurred a net yearly loss since 2010, when it recorded a P59.04 billion net loss compared with a net income of P13.13 in 2009.
BSP Deputy Governor Diwa Guinigundo said the deficit was attributable to the “costs of open market operations and the implications of foreign exchange fluctuations.”
“To us, that is the cost. Actually in our operations, we yielded better results. But because of the cost of the open market operations and the implications of the foreign exchange fluctuations, we continue to sustain some losses,” Guinigundo said.
The BSP deputy governor said the net losses would prove that the Philippine economy is growing.
“We improved, our losses were reduced. That’s the paradox of the exchange. If the exchange rate improves, it means that the economy’s improving, BSP incurs losses. If the peso is depreciating because of bad economy, the BSP will earn,” Guinigundo explained.
“We have $81 billion in reserves. When you express everything in peso—and if the peso is appreciating—the BSP [appears]to lose. Without doing anything, you lose,” he added.
Profits were pulled down by higher expenses—up by 5.7 percent to P72.78 billion from P68.87 billion in 2014.
Despite the negative net, BSP saw 2015 revenues improve by 14 percent to P56.75 billion from P49.78 billion the previous year on the back of the growth in both interest income and miscellaneous income.
In addition, the strengthening dollar in the latter part of the year led to an P11.55 billion gain on foreign exchange fluctuations, bringing up the peso value of foreign-denominated assets held by the BSP.