GSIS profit jumps to P140B

MANILA, Philippines - The Government Service Insurance System (GSIS) reported a three-fold jump in net income last year, boosted by a transition to fair value accounting of financial assets, hefty profits from asset sales, and higher gains from investments in the local equity and and fixed-income markets.

In a briefing Friday, GSIS president and general manager Robert Vergara said net earnings reached P140 billion, significantly higher than the P44.3 billion recorded in 2013.

Last September, GSIS made history with the sale of two properties in Taguig City, generating more than P1 billion in profit and setting a benchmark of P500,000 per square meter in the burgeoning Bonifacio Global City.

Total revenues jumped 71 percent to P231.5 billion, driven by improved collection efficiency and a resurgent stock market.

The state pension fund ended 2014 with total assets of P910 billion, up 15.6 percent year-on-year.

As of end-2014, bulk of the fund’s assets are invested in fixed-income securities while more than a quarter is in the form of members’ loans, 17 percent in equities, four percent in real estate and the rest in cash.

“2014 was a record year for the GSIS even without the boost we got from the fair value accounting of our financial assets… The goal for this year is to sustain this momentum and generate sufficient investment returns to continue to provide responsive service and benefits to our 1.8 million members and stakeholders,” Vergara said.
For this year, the GSIS is looking at a net income of P50 billion to P60 billion, Vergara said.

He said the equities market remains attractive given a low interest rate environment. Investments in equities are nearing 19 percent of the agency’s total investible funds, which stood at P860 million as of end-December last year.

The GSIS paid out P84.2 billion in claims and benefits to members and pensioners, higher than the previous year’s level due to the implementation of rationalization plans in government agencies in the fourth quarter of 2013.

Vergara remains bullish on the country’s prospects this year given a roust economy, steady inflows from overseas Filipino workers and growing consumer spending.
Aside from equities, the agency is looking at other ways to generate higher returns to further boost liquidity and provide better service to its members.