The Bangko Sentral ng Pilipinas (BSP) recently released its financial report for the year 2023, revealing a significant decline in net income. The central bank reported a net income of P25.53 billion, marking a sharp 59.9 percent decrease from the previous year’s figure of P63.73 billion. This decline was primarily attributed to increased expenses incurred during the period.

Revenue Increase

Despite the drop in net income, the BSP witnessed an increase in revenues for the year 2023. Total revenues amounted to P212.76 billion, reflecting a substantial rise of 50.8 percent compared to P141.08 billion in 2022.

The central bank’s expenses surged in 2023, contributing to the decline in net income. Expenses increased by 68.3 percent, reaching P244.21 billion, compared to P145.13 billion in the previous year. This increase in expenses can be attributed to various factors, including heightened operational costs and investments.

BSP’s revenues primarily stemmed from interest income generated from international reserves and domestic securities. In 2023, interest income surged by 29 percent, reaching P197.92 billion, up from P85.63 billion in the previous year. Additionally, miscellaneous income, which includes trading gains/losses, fees, penalties, and other operating income, saw improvement, totaling P14.84 billion by the end of 2023.

Expenditures Breakdown

Under expenditures, BSP’s interest expenses notably increased to P168.29 billion in 2023, marking a significant rise of 96.5 percent from P85.63 billion in the previous year. These expenses encompass various costs, including banknote production, coin minting, taxes, license fees, and open market operations.

The BSP reported a decline in foreign exchange (FX) gains for the year 2023. FX gains decreased by 15.7 percent to P57.02 billion, down from P67.66 billion in 2022. FX gains represent realized gains resulting from fluctuations in foreign exchange rates arising from BSP’s foreign currency-denominated transactions.

Total assets of the BSP amounted to P7.563 trillion in 2023, reflecting a 4.4 percent increase compared to P7.247 trillion in 2022. This increase was primarily driven by higher international reserves and domestic securities. However, total liabilities also rose by four percent to P7.42 trillion compared to P7.136 trillion previously.

BSP’s Net Worth and Capital

The BSP’s net worth as of the end of 2023 stood at P142.73 billion, up from P111.02 billion in 2022. This increase was supported by surplus reserves amounting to P82.73 billion. However, it’s noteworthy that the BSP’s capital remains at P60 billion, falling short of the P200 billion required under the amended BSP Charter in 2019.

The BSP’s capitalization buildup has been affected by the Maharlika Investment Fund (MIF) law, which mandates the BSP to divert its dividends as seed money to the sovereign wealth fund managed by the Maharlika Investment Corp. (MIC). This has led to delays in increasing the BSP’s capitalization, although central bank officials remain confident in managing these challenges.

Despite the decline in net income and challenges in capitalization buildup, the BSP continues to uphold its mandate of ensuring price and financial stability in the Philippines.