SNB Reports Nine-Month Profit as Portfolio Gains Offset Franc

(Bloomberg) — The Swiss National Bank made a solid nine-month profit on rising equities, bonds and gold prices, increasing the chances for a restart of profit distributions after a two-year break.

Switzerland’s central bank notched up a gain of 62.5 billion francs ($72 billion) for the first nine months of the year, it said on Thursday. Although the strong franc ate into the results, the SNB extended its profit during the July-September period.

The appreciated Swiss currency dealt a blow to proceeds from SNB’s large assets held in foreign currencies. Still, at 52.4 billion francs, those stocks and bonds continued to yield the largest part of the profit.

Gold holdings earned a valuation gain of 16.6 billion francs, while franc positions accrued a loss of 6.2 billion francs, mainly because the institution had to pay interest on deposits of commercial banks.

With the earnings, the central bank remains on track for an extraordinary year. Economists at UBS said on Monday that it’s “astonishing that given an estimated profit potential of 10-15 billion francs, the SNB is likely to generate an annual profit of more than 50 billion francs.” They had estimated a nine-month gain between 60 and 65 billion francs.

However, UBS analysts Florian Germanier, Alessandro Bee and Maxime Botteron cautioned that while things look good at the moment, the US elections and geopolitical uncertainties in the Middle East might catch up with the SNB in the remainder of the year — particularly through a further appreciation of the franc.

To restart making payouts to the Swiss government and cantons — which have been suspended for two years after a record loss in 2022 — the central bank has to earn a profit of at least 65 billion francs on the full year, UBS estimated. While that currently seems to be in reach, it’s by no means certain as the SNB’s bottom line is strongly determined by market developments.

In the future, payouts are also threatened from another angle. In Monday’s report, the economists pointed out that due to the central bank’s rules, its provisions for currency reserves increase every year. This means that from 2026, the requirement could exceed the institution’s annual profit potential.

“If the SNB intends to maintain distributions in the future, an adjustment of the existing rules governing allocation is unavoidable, in our view,” they said.

It’s unclear whether the central bank is open to change its rules. Martin Schlegel said in April that building up capital must have priority over generating payouts. Schlegel was vice president when he made those comments and has since been promoted to the top job.

The SNB’s earnings don’t influence its monetary policy. Preliminary full-year results are due on Jan. 9.

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