MAS net profit falls 45% on lower investment returns

MAS net profit falls 45% on lower investment returns

A view of the Monetary Authority of Singapore's headquarters in Singapore
A view of the Monetary Authority of Singapore's headquarters in Singapore on Jun 28, 2017. (Photo: REUTERS/Darren Whiteside/Files)

SINGAPORE: The Monetary Authority of Singapore (MAS) said on Thursday (Jul 16) that net profit in its last financial year fell 44.8 per cent, after investment income took a hit from sharp declines in the global markets.

Net profit for the year ended Mar 31 came in at S$10.6 billion, compared with S$19.2 billion in the previous year, according to its annual report for the 2019/20 financial year.

The figure, which is after a S$2.2 billion contribution to the Government’s consolidated fund, arose mainly from positive currency translation effects.

Total expenditure increased 10.5 per cent to S$4.4 billion, due to higher interest expenses during the year.

READ: MAS to disclose more information on monetary policy operations

MAS said it made total gains of S$16.3 billion on its official foreign reserves in the year.

Investment returns accounted for S$2.1 billion, down nearly 92 per cent from S$25.2 billion logged in the previous year, after global markets declined sharply in the last quarter of the year, the central bank said.

Foreign exchange gains made up the rest of the returns at S$14.2 billion, primarily due to a weaker Singapore dollar against the US dollar, euro and the Japanese yen. This compares with the S$1 billion reported last year when the Sing dollar appreciated against most of the major currencies.

At the end of March, MAS held S$397.5 billion of foreign reserves on its balance sheet.

It said that the funds are invested in a well-diversified portfolio, comprising different asset classes across various economies and currencies to achieve “good long-term returns and resilience across market conditions”.

About three-quarters of the foreign reserves are denominated in the US dollar, euro, yen and pound, with the greenback forming the bulk. Investment-grade bonds in the advanced economies form the largest allocation in the portfolio, MAS said.

Half of the net profit for FY2019/20 – S$5.3 billion – will be returned to the Government, said MAS managing director Ravi Menon at an online press conference for the central bank’s annual report.

The remainder will be added to the MAS’ reserves.

In its annual report, the central bank also noted a transfer of S$45 billion from the official foreign reserves to the Government in May 2019 for “longer-term investment purposes”.

It said that its stock of foreign reserves has “grown steadily over the years” and “the amount was the excess over what was deemed necessary” to conduct its exchange rate-centered monetary policy. 

Source: CNA/aj

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