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swiss national bank continues on profit path. the swiss national bank (snb) met expectations, reporting a profit once again for the third quarter, a positive signal for the swiss government and cantons. however, they should temper their expectations for distributions, as currency fluctuations could still impact the year-end results. the snb generated a profit of 62.5 billion francs in the first three quarters of 2024. gains from foreign currency investments amounted to 52.4 billion francs, while gold contributed an additional chf 16.6 billion. conversely, losses on franc positions amounted to 6.2 billion francs, as detailed in thursday morning's report. the snb's results are primarily influenced by financial market developments, with equity prices, interest rates, exchange rates, and gold prices determining the value of its extensive foreign currency holdings (738 billion francs as of the end of september, invested in equities and bonds) and its gold reserves (74 billion francs). gold outperforms foreign currency investments in q3. examining the third quarter in isolation, the snb posted a profit of 5.7 billion francs (following a 2 billion francs loss in q2). gold emerged as the top performer from july to september, contributing 4.4 billion francs due to rising prices, outpacing foreign currency investments (3.1 billion francs). franc positions remained in the red with a 1.7 billion francs loss, primarily due to the snb’s policy implementation costs. these costs include interest payments on bank deposits and liquidity management through repo operations and snb bill issuances, both of which generate interest expenses. benefiting from strong market performance. the snb's quarterly profit fell at the lower end of the 5-10 billion francs range projected by ubs economists earlier in the week. like many other investors, the snb has benefited from this year’s exceptional market performance (rising equity prices, declining interest rates, and a surge in gold prices). even foreign exchange profits reached 7.9 billion francs in the first three quarters. balance sheet changes. as a result, a distribution to the swiss government and cantons—a prospect that seemed remote at the beginning of the year due to a depleted distribution reserve—now appears more likely. however, a challenging fourth quarter could still diminish these results, as a strengthening franc could quickly erode accumulated book gains. the snb’s total assets reached chf 833.7 billion by the end of september, up 39.1 billion francs from the end of 2023. the increase in assets was primarily driven by a 60.9 billion francs rise in foreign currency investments, while covered loans (loans issued under covid relief and emergency liquidity assistance) csaw a substantial reduction of 38.4 billion francs. on the liabilities side, snb bills decreased by 37.1 billion francs, while equity grew by 62.5 billion francs, reflecting the year-to-date profit.
Swiss National Bank Continues on Profit Path
The Swiss National Bank (SNB) met expectations, reporting a profit once again for the third quarter, a positive signal for the Swiss government and cantons. However, they should temper their expectations for distributions, as currency fluctuations could still impact the year-end results.
The SNB generated a profit of 62.5 billion francs in the first three quarters of 2024. Gains from foreign currency investments amounted to 52.4 billion francs, while gold contributed an additional CHF 16.6 billion. Conversely, losses on franc positions amounted to 6.2 billion francs, as detailed in Thursday morning's report.
The SNB's results are primarily influenced by financial market developments, with equity prices, interest rates, exchange rates, and gold prices determining the value of its extensive foreign currency holdings (738 billion francs as of the end of September, invested in equities and bonds) and its gold reserves (74 billion francs).
Gold Outperforms Foreign Currency Investments in Q3
Examining the third quarter in isolation, the SNB posted a profit of 5.7 billion francs (following a 2 billion francs loss in Q2). Gold emerged as the top performer from July to September, contributing 4.4 billion francs due to rising prices, outpacing foreign currency investments (3.1 billion francs).
Franc positions remained in the red with a 1.7 billion francs loss, primarily due to the SNB’s policy implementation costs. These costs include interest payments on bank deposits and liquidity management through repo operations and SNB Bill issuances, both of which generate interest expenses.
Benefiting from Strong Market Performance
The SNB's quarterly profit fell at the lower end of the 5-10 billion francs range projected by UBS economists earlier in the week. Like many other investors, the SNB has benefited from this year’s exceptional market performance (rising equity prices, declining interest rates, and a surge in gold prices). Even foreign exchange profits reached 7.9 billion francs in the first three quarters.
Balance Sheet Changes
As a result, a distribution to the Swiss government and cantons—a prospect that seemed remote at the beginning of the year due to a depleted distribution reserve—now appears more likely. However, a challenging fourth quarter could still diminish these results, as a strengthening franc could quickly erode accumulated book gains.
The SNB’s total assets reached CHF 833.7 billion by the end of September, up 39.1 billion francs from the end of 2023. The increase in assets was primarily driven by a 60.9 billion francs rise in foreign currency investments, while covered loans (loans issued under COVID relief and emergency liquidity assistance) csaw a substantial reduction of 38.4 billion francs. On the liabilities side, SNB Bills decreased by 37.1 billion francs, while equity grew by 62.5 billion francs, reflecting the year-to-date profit.
