The Monetary Authority of Singapore (MAS) has recorded a net profit of $3.8 billion for the FY2023/24 ended March 31, reversing from two years of net losses owing to currency translation effects.
Total income for the financial year amounted to $25.2 billion, swinging back from a total loss of $17.1 billion in the previous financial year, due mainly to investment gains on the official foreign reserves (OFR) and income from Reserves Management Government Securities (RMGS), announced the central bank and regulator on July 17.
MAS recorded an investment gain of $12.7 billion in FY2023/24, up from $0.6 billion the prior financial year. According to MAS, global markets generally rebounded, particularly in the second half of the financial year, amid resilient global growth and moderating inflation.
Currency translation effects turned positive for the first time since FY2019/20 and amounted to $1.7 billion in the most recent financial year. MAS managing director Chia Der Jiun says the US dollar, euro and pound sterling strengthened slightly against the Singapore dollar during the period.
As MAS’s financial results are reported in Singapore dollars, currency movements of the Singapore dollar against foreign currencies of the OFR will result in translation effects in MAS’s financial statements. Currency translation effects are thus a consequence of MAS’s conduct of exchange rate-based monetary policy.
See also: MAS posts net loss of $30.8 bil for FY2022/23 amid depressed market environment
The Singapore dollar was relatively stronger during the pandemic years and this weighed on MAS’s investment gains. MAS posted a net loss of $7.4 billion in FY2021/22 — the first net loss since FY2012/13 — and a deeper net loss of $30.8 billion for FY2022/23. That year’s net loss was the largest ever recorded by MAS, and currency translation effects were a negative $21.4 billion.
Meanwhile, MAS attributed FY2023/24 total expenditure of $21.4 billion to interest expenses on MAS bills and other borrowings for domestic money market operations. Total expenditure was lower at $13.7 billion in the previous financial year.
See also: MAS’ wrestle with inflation tips FY2021/22 into $7.4 bil net loss
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. In FY2023/24, MAS incurred a net cost of $9.2 billion in its conduct of money market operations, after offsetting interest income from RMGS.
As at March 31, total capital and reserves of MAS was $38.1 billion, up from $34.3 billion a year ago.
For the third consecutive financial year, there was no contribution to the Consolidated Fund, nor return of profits to the Singapore government. For comparison, MAS contributed $1.07 billion to the fund in FY2020/21 and $2.17 billion in FY2019/20.
The Consolidated Fund is akin to a bank account held by the Singapore government. Statutory boards, MAS included, contribute to the Consolidated Fund based on 17% of the net profit for the year, after offsetting cumulative losses from previous financial years. This is paid in equal proportions over three subsequent years.
At the release of last year’s annual report, former MAS managing director Ravi Menon said MAS is unlikely to be able to resume contributing to the Consolidated Fund “over the next few years”, as it must first generate profits to cover $38.2 billion in cumulative losses over the two loss-making financial years. With this year’s $3.8 billion net profit, MAS has to make $34.4 billion in net profit before it can resume contributions.
Read more about MAS's annual report for FY2023/24:
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- S'pore's net AUM inflows falls to $193 bil in 2023, but AUM grows to $5.4 tril
- Total debt issued in S’pore grows 10.5% y-o-y to $556 bil in 2023 from multinationals’ financing needs
- Wait time for tax incentive applications to be shortened, banks’ AML rules to be standardised: MAS
- S’pore growth ‘should strengthen this year’: MAS
Photo and chart: Monetary Authority of Singapore
