SINGAPORE: The Monetary Authority of Singapore (MAS) made a net profit of S$5.3 billion in the previous financial year, according to its annual report for FY2017/18 released on Wednesday (Jul 4).
The figure, which excludes a S$1.1 billion contribution to the Consolidated Fund, is lower than last year’s record net profit of S$24.3 billion as negative currency translation effects partially offset interest income and investment gains.
AdvertisementFor the year that ended March 2018, MAS made a gain of S$8.5 billion from the investments of its official foreign reserves (OFR).
While the OFR recorded “strong investment gains” of S$22.3 billion as global markets continued to rally, negative currency translation effects amounted to S$13.8 billion as the Singapore dollar strengthened against the US dollar and the Japanese yen.
This compared with the investment gain of S$30.1 billion made during FY2016/17 on the back of higher investment returns and gains due to Singapore dollar’s depreciation against major currencies.
“Investment gains … are inherently volatile,” said MAS managing director Ravi Menon.
AdvertisementAdvertisement“The best way to interpret the number is to look at the 10-year average (which is a) good judgment of the kinds of investment gains that MAS is making over a long-term period. Year to year, there will be fluctuations.”
Over the last 10 financial years, investment gains, derived after stripping out currency translation effects, averaged S$12.1 billion per annum, according to the central bank’s annual report.
As of Mar 31, 2018, MAS held S$376.5 billion of OFR on its balance sheet. This is invested in a well-diversified portfolio made up of different asset classes across different geographies, for good long-term returns and resilience across market conditions.
About three-quarters of the MAS’ portfolio is denominated in the US dollar, euro, yen and British pound, with the greenback forming the bulk. Investment-grade bonds in the advanced economies form the largest allocation in the portfolio, said the annual report.
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