Swiss National Bank back in the black

The SNB has had a good first half of the year Keystone

The Swiss National Bank (SNB) said on Friday it had made a first-half distributable profit of SFr6.7 billion ($5.21 billion) for 2005.

This year’s “extremely positive results” compare with last year’s loss for the same period of SFr0.9 billion.

The distributable profit is the amount of the annual profit shared out to the federal authorities and the country’s 26 cantons. It is worked out taking into account provisions allowing the bank to maintain the currency reserves at a level necessary for monetary policy and with an eye on the development of the Swiss economy.

“The gold price and the United States dollar increased substantially, while interest rates declined slightly,” said the bank in a statement.

“This accumulation of favourable market developments led to unusually high valuation gains on foreign currency investments and gold holdings.”

In all, the gold price and the US dollar both climbed by 13 per cent in the first six months of the year and the exchange rates of all other investment currencies also moved up.

Interest rates in all SNB-relevant investment markets dropped slightly, with a particularly sharp decline in Euro interest rates.

The SNB said that the distribution profit for 2004 totalled SFr24 billion. In addition to the ordinary distribution to the federal authorities and cantons of SFr2.9 billion, a further SFr21.1 billion was handed out from the proceeds of the sale of the bank’s excess gold reserves.

But it warned that it was not ready to speculate on the whole year results, because the financial result is strongly affected by market conditions.

Growth forecast

Last month, the National Bank revised its growth forecast for the economy down to one per cent from 1.5 per cent in its previous assessment in March.

But it said it saw no risk of a renewed downturn in the Swiss economy, although a recovery had slowed somewhat.

“There are no signs of any cyclical downturn and the economy continues to recover, even if this recovery is somewhat delayed and muted,” commented the bank’s president, Jean-Pierre Roth.

The bank’s forecast for inflation was unchanged at an average annual rate of one per cent.

swissinfo with agencies

Key facts

The Swiss National Bank conducts the country’s monetary policy as an independent central bank.
Its shareholders are mostly made up of the cantons and the cantonal banks.
Private individuals can also be shareholders, but this is limited.
The government has no shares.
The SNB cannot be taken over by a private enterprise.