The assets of the Swiss National Bank had a typical rollercoaster ride over the past months and only a surge in the gold price allowed it to post a profit for the first half.
The Swiss National Bank (SNB) had a profit of 768 million Swiss francs ($846 million) in the first half of 2020, according to a statement released on Friday. In the same period of last year, the bank had surprised with a giant profit of 34 billion francs.
Gold Price Came to the Rescue
The central bank only managed to post a profit because of this year’s surge in the gold price. The value of the bank’s reserves increased by 7.1 billion francs as the price of a kilo of gold rose to 54,069 francs by the end of June, from 47,222 at the end of 2019. The SNB didn’t sell or buy any bullion over the reporting period.
The change in the value of gold more than offset the drop in the foreign currency positions, where the high volatility in the financial markets left its mark. Exchange rate-related losses amounted to a full 19.1 billion francs. Equity securities and instruments registered a loss of 4.4 billion francs, while interest-bearing papers and instruments generated a whopping gain of 10.8 billion francs.
Second-Quarter Recovery
The SNB, like many commercial banks too, had a strong recovery in the second quarter as equity prices surged following the plunge in March. The foreign currency positions recorded a plus of 34.4 billion in the three-month period through June.
The Swiss franc positions in the first half had a profit of 634 million francs, resulting mainly from negative interest charged on sight deposit account balances.
