In its Annual Report 2019, the central bank said it generated RM8.93 billion in net profit after tax last year compared with RM7.52 billion in the previous year.
Of the RM8.93 billion, BNM has transferred RM5.4 billion to its risk reserve account, up from RM5 billion in 2018. The risk reserve acts as a crucial financial buffer against unexpected losses arising from unfavourable market conditions that are beyond the bank’s control.
“The unfavourable market conditions include movement of interest rate in the United States and other advanced economies as well as fluctuations in foreign exchange and global equity markets,” BNM said in the report.
The report also noted that the bank is exposed to foreign exchange volatility, in particular due to investments of the international reserves which are in foreign currency, while the liability is in ringgit.
BNM also reiterated that despite its status as a statutory body, it does not rely on public funds from the government to support its day-to-day operations.
“(We) are funded by income generated from our investments of the country’s international reserves,” it said, adding that BNM generated a total income of RM11.13 billion last year against RM9.33 billion in 2018 after deducting costs associated with managing the international reserves portfolio and conducting monetary operations.
“Against this, we incurred expenses of RM2.16 billion in 2019 versus RM1.77 billion in 2018 to manage day-to-day operations (recurring expenditure) and also expenses to finance developmental and long-term projects,” BNM said. The expenditures incurred were for the currency operations and to maintain the country’s currency infrastructure.
As at Dec 31, 2019, BNM’s assets totalled RM451.6 billion versus RM447.64 billion in 2018, with an international reserves portfolio valued at RM424.09 billion which constituted the bulk (94 per cent) of the bank’s assets.
Its liabilities arose mainly from deposits from financial institutions (RM163.71 billion) as well as currency in circulation (RM114.1 billion).