MAS posts net profit of S$3.8 billion in part due to strong investment gains

SINGAPORE: The Monetary Authority of Singapore (MAS) recorded a net profit of S$3.8 billion (US$2.83 billion) in the financial year that ended on Mar 31, a reversal from the record S$30.8 billion loss reported the year before.

Managing director Chia Der Jiun said on Thursday (Jul 18) that MAS made investment gains of S$12.7 billion, more than 20 times the S$0.6 billion in the previous year.

The investment gains came mainly from interest income, dividends and realised capital gains, said Mr Chia at the release of the central bank’s annual report.

MAS generated a total income of S$25.2 billion.

There was also a “small positive currency translation effect” of S$1.7 billion in the financial year. This is because MAS reports its results in Singapore dollars, and the euro, pound sterling and US dollar – which some of the official foreign reserves are held in – strengthened against the local currency.

Total expenditure was S$21.4 billion, due largely to interest expenses on MAS bills and other borrowings for domestic money market operations. This is up from S$13.7 billion a year ago.

"As Singapore Dollar interest rates rose together with the increase in global interest rates, MAS incurred higher interest expense in its conduct of money market operations," MAS said in its annual report.

Money market operations to manage Singapore’s banking system, liquidity and other expenses cost S$10.6 billion this year.

Despite the overall profit, there was no contribution to the government's consolidated fund nor return of profits to the government for the financial year.

Its total capital and reserves stood at S$38.1 billion as at Mar 31.

SINGAPORE’S GROWTH MOMENTUM TO STRENGTHEN

Against the backdrop of relatively supportive global growth and disinflation, Mr Chia said growth momentum locally is expected to strengthen, with major sectors returning to pre-pandemic norms.

“For the full year, GDP (gross domestic product) growth will come in closer to its potential rate of 2 to 3 per cent,” he said.

The Ministry of Trade and Industry (MTI) expects GDP for 2024 to be between 1 and 3 per cent. Inflation in Singapore has also moderated, with core inflation at 3.1 per cent in May.

With regard to the global economy, Mr Chia said growth has been resilient in the past year and is expected to remain broadly steady.

“Beyond this year, we remain vigilant to the risks to the global growth outlook,” he said, pointing to high interest rates potentially increasing strain on private sector spending.

Uncertainties in the Middle East and the risk of rising global protectionist policies could also affect confidence and investment, and push up production costs, he said.

SUPPORT FOR QUANTUM AND AI CAPABILITIES

MAS also announced on Thursday that it would commit an additional S$100 million under the Financial Sector Technology and Innovation Grant Scheme to support financial institutions in building capabilities in quantum and artificial intelligence technologies.

Grants will be given to support the setup of quantum computing and security innovations in Singapore, the adoption of such solutions and to improve cyber security readiness.

The grants can also be used to help financial institutions develop and deploy AI technologies or develop AI platforms that can be used in the industry.