Weak Franc Boosts Swiss National Bank Profit, But Uncertain Outlook for Future Distributions

In the first quarter, the Swiss National Bank (SNB) reported a profit of 59 billion francs. This was due to the weakening of the franc, which increased profits when converted back to francs. The SNB’s assets are primarily foreign currency investments, so a weaker franc is beneficial for their profits. However, the SNB also lost money on bonds due to increased yields on American government bonds.

While this quarterly profit was impressive, it may not lead to a distribution to the state at the end of the year. In order for any distribution to be possible, the SNB would need to generate a profit of 65 billion francs for the year. Given the uncertainties in financial markets and the potential for the franc to appreciate again over the course of the year, it is unlikely that they will reach these necessary profit levels.

Financial politicians are advised not to budget for SNB distributions as there is potential for savings in other areas such as public administration wages which saw a substantial increase compared to national average. The unpredictable nature of financial markets and SNB’s balance sheet size means that even small price corrections can have major consequences for profits. Therefore, it is best to remain cautious about future profit distributions.