The Monetary Authority of Singapore (MAS) has recorded a net profit of $19.7 billion for the financial year ended March 31, up from $3.8 billion in the previous financial year, while investment gains from the management of MAS’s foreign investments more than doubled y-o-y to $31.4 billion from $12.7 billion.

However, there was no contribution to the Singapore government’s Consolidated Fund, nor return of profits to the government, for the fourth consecutive financial year.

With the $19.7 billion net profit recorded in FY2024/25, MAS still has to generate net profit of around $14.7 billion in the current or future financial years to cover $38.2 billion in cumulative losses recorded over two loss-making financial years: FY2021/22 and FY2022/23.

For context, 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.

Former MAS managing director Ravi Menon said in 2023 that MAS is unlikely to be able to resume contributing to the Consolidated Fund “over the next few years” until it covers the cumulative losses.

All assets up

According to MAS’s latest annual report, released July 15, the $19.7 billion investment gain was mainly from interest income, dividends and realised gains from the management of MAS’s foreign investments. “Global markets generally performed well [during the financial year], amidst resilient global growth and moderating inflation… All major asset classes including developed markets and emerging markets bonds and equities posted positive returns.”

Over the past 10 financial years, the average annual investment gains was $14.8 billion.

These investment gains were partially offset by negative currency translation effects of $3.4 billion, mainly due to a strengthening Singapore dollar against the US dollar.

As MAS’s financial results are reported in Singapore dollars, currency movements of the Singapore dollar against foreign currencies of the official foreign reserves (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.

Over the past 10 financial years, currency translation effects averaged $4.0 billion annually.

Save for a positive currency translation of $1.7 billion an outlier in FY2023/24; MAS has recorded negative currency translation effects every financial year since FY2020/21.

In FY2024/25, MAS’s total investment gains net of negative currency translation effects was $28.0 billion.

Monetary management

MAS, as a central bank, manages the Official Foreign Reserves (OFR) and conducts money market operations to manage liquidity in the banking system.

In performing its functions, MAS incurred net expenses of $8.3 billion, mainly from MAS’s money market operations to manage banking system liquidity, after offsetting interest income from Reserves Management Government Securities (RMGS).

As at March 31, MAS held $514.2 billion, or US$382.6 billion, of OFR.

According to MAS, the OFR is invested in a “well-diversified portfolio” of cash, bonds, equities and commodities that provides sufficient liquidity to conduct monetary policy and support financial stability.

The portfolio is also diversified across advanced and emerging market economies, and across different currencies, adds MAS.

Investment-grade bonds in the advanced economies form the largest allocation in the portfolio, according to MAS, and three-quarters of the OFR is denominated in US dollars, euros, Japanese yen and pounds sterling, with “the bulk” in US dollars.

As part of monetary policy implementation, MAS may accumulate OFR in excess of the amount it requires for the conduct of monetary policy and support of financial stability. The optimal size of OFR is about 65% to 75% of GDP, according to MAS.

Under such circumstances, MAS may subscribe to RMGS to transfer OFR — above what it requires — to the Singapore government for longer-term management by GIC. This enables such foreign assets to be invested in longer-term, higher-yielding assets, according to MAS.

In FY2024/25, MAS transferred $26.0 billion to the Singapore government for management by GIC.

Taking into account redemptions of RMGS, outstanding RMGS holdings increased from $260.1 billion to $274.1 billion; MAS received $10.4 billion in interest income from its holdings of RMGS.

RMGS interest income is a function of the amount of RMGS and prevailing Singapore dollar interest rates.

Thus, MAS’s $31.4 billion in investment gains, net of $3.4 billion in negative currency translation effects and net expenses of $8.3 billion, resulted in a net profit of $19.7 billion for FY2024/25.

As at March 31, MAS’s total capital and reserves was $57.8 billion, up from $38.1 billion in the previous financial year.

Chart: MAS