Losses from foreign exchange holdings bite Swiss National Bank's profit.
Switzerland's central bank reported a first-quarter loss of 32.8 billion Swiss francs ($33.9 billion), stemming from a 36.8 billion francs loss on its foreign currency positions, the SNB announced Thursday with the release of its results.
The result is a stark reversal from the comparable year-ago quarter when it booked a profit of 37.7 billion francs, where foreign exchange also played the leading role, with a 39.9 billion franc gain.
The SNB said its results came «largely on developments in the gold, foreign exchange and capital markets. Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result.»
Foreign Currency Losses
Although the SNB earned 1.6 billion francs on interest income and a further 800 million in dividend income, it saw a 25.1 billion loss on interest-bearing paper and instruments. For equities, this amounted to a 10.7 billion loss, while exchange-related losses were 3.4 billion francs. In total, the loss on its positions denominated in foreign currencies was 36.8 billion.
Swiss Franc and Gold
A gain of 4.2 billion francs was recorded for the banks' gold holdings, due to the valuation of the precious metal rather than an increase in volume, the SNB said. That reflects an increase of 6.5 billion francs over the first quarter of last year when it had a 2.3 billion franc loss.
Similarly, it profited from its Swiss franc position, booking a 10.6 million franc gain. The SNB said that negative interest charged on sight deposit balances was particularly countered by losses on interest-bearing paper and instruments. Still, the Swiss franc result was lower than a year ago when it had a 267 million franc gain.
By law, the SNB has to set aside provisions that permit it to maintain currency reserves at a level needed to conduct monetary policy, with the allocation for the current financial year determined at year-end.
