KUALA LUMPUR (March 29): Bank Negara Malaysia (BNM) generated a total income of RM8.52 billion in 2022, down 41.84% compared with RM14.65 billion in 2021, according to its annual report released on Wednesday (March 29).
This came as operating income dropped 41.05% to RM8.3 billion from RM14.08 billion.
Loans and advances income fell to RM43 million from RM64 million, while other income declined 66.27% to RM169 million from RM501 million.
BNM does not rely on funds from the government to support its day-to-day operations, but is funded by income generated from its investments of the country’s international reserves. Its net of costs is associated with managing the international reserves portfolio and conducting monetary operations.
The central bank said its total recurring and development expenditures amounted to RM1.48 billion in 2022, against RM1.81 billion in 2021. Total recurring expenditure rose slightly to RM1.38 billion from RM1.31 billion in 2021, while total development expenditure fell to RM104 million from RM509 million.
Development expenditure are other expenditures which are not part of recurring expenditure incurred mainly to finance developmental and long-term projects undertaken by BNM that are in line with its principal objectives and functions.
In terms of net profit, BNM said it generated RM6.99 billion in 2022, versus RM12.8 billion in 2021, and an average of RM9.39 billion from 2017 to 2021.
The lower net profit, it said, was due to weaker investment returns on the back of significant challenges and volatilities in the international financial market amid aggressive interest rate hikes in advanced economies that led to lower valuations, the military conflict in Ukraine, and concerns over prolonged lockdown in China.
“The lower profit was not unique to Malaysia but also experienced by other central banks. Of the total net profit after tax in 2022, RM4.24 billion will be transferred into our risk reserve,” BNM said, adding that the remaining RM2.75 billion in net profit will be paid as dividend (2021: RM5 billion) to the government.
As at Dec 31, 2022, the general reserve fund of BNM was at RM28.89 billion while the risk reserve was at RM116.61 billion. The central bank transferred RM7.8 billion of its net profit in 2021 into its general reserve fund last year.
The risk reserve is a financial buffer comprising cumulative transfers of net profits, unrealised gains or losses on translation of foreign currency assets and liabilities and fair value changes from securities carried at fair value.
“As the global economy is expected to remain challenging, it is imperative for the bank to continue to strengthen its risk reserve and thus, build buffers against future financial market volatility and economic shocks,” BNM said.
“The bank’s risk reserves to cushion against unexpected losses arising from adverse financial market conditions stood at RM120.85 billion or 20% of total assets following the transfer of net profits for the year,” it added.
BNM’s assets as at Dec 31, 2022 totalled RM619.04 billion (2021: RM551.61 billion), with RM503.33 billion (2021: RM486.85 billion) of international reserves portfolio constituting the bulk (81%) of its assets. Total liabilities stood at RM465.74 billion (2021: RM364.71 billion).
“Our liabilities arise mainly from deposits by financial institutions (RM221.89 billion) and currency in circulation (RM162.07 billion),” said the central bank.
Don't miss the other highlights of the BNM Annual Report 2022. Read the articles here.