Swiss central bank profits plummet by half

Profits and losses at Switzerland's central bank can change dramatically from one quarter to the next. Keystone / Thomas Hodel

A Swiss National Bank (SNB) payout to the Swiss government and cantons for 2024 is looking less likely after losses in the second quarter halved the central bank’s early-year profits.

The SNB reported a half-year profit of CHF13.7 billion ($15.7 billion), according to a statement Monday, down from a gain of CHF26.9 billion in the three months through March.

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Switzerland’s central bank earned CHF16.2 billion  from its large foreign-currency holdings as the appreciation of the franc weighed on the global rally in equity markets. It also saw a  CHF1.2 billion profit on its gold holdings.

While SNB’s portfolio did well with profits of CHF2.8 billion on bonds and CHF26.2 billion on equities, the profit on foreign-currency positions was reduced by exchange-rate losses of CHF19.6 billion.

Results still beat a forecast by UBS economists Alessandro Bee and Florian Germanier, who had predicted a first-half profit between CHF2 and 12 billion.

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They estimate that the institution needs to earn between CHF45 billion and CHF50 billion this year so it can resume paying a dividend for 2024. A payout for this year is already out of the question, according to the economists.

Last year, the SNB saw the worst loss in its history with a shortfall of CHF132.5 billion, forcing it to omit the regular payment to shareholders, the Swiss government and cantons for only the second time since the institution was founded in 1906.

The central bank’s results are heavily influenced by developments in markets, so quarterly results are primarily a snapshot.

Earnings from SNB’s operations don’t influence monetary policy. Third-quarter results are due on October 31.

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