SNB posts 7.9 billion CHF Profit in Q1

The increasing volatility of SNB Earnings

Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.

But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse

SNB Results Longterm 2016

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Interim results of the Swiss National Bank as at 31 March 2017

The Swiss National Bank (SNB) reports a profit of CHF 7.9 billion for the first quarter of 2017.

A valuation gain of CHF 2.2 billion was recorded on gold holdings. The profit on foreign currency positions amounted to CHF 5.3 billion.

The SNB’s financial result depends 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.

SNB Results in the first 1 Quarters 2017: +2.2 billion CHF

Source: snb.ch - Click to enlarge

Profit on foreign currency positions

The net result on foreign currency positions amounted to CHF 5.3 billion.

Interest income accounted for CHF 2.1 billion and dividends for CHF 0.6 billion. Movements in bond prices differed from those in share prices. A loss of CHF 1.6 billion was recorded on interest-bearing paper and instruments. By contrast, equity securities and instruments benefited from the favourable stock market environment and contributed CHF 6.3 billion to the net result. Overall, exchange rate-related losses amounted to CHF 2.2 billion.

SNB Profit on Foreign Currencies, Q1 2017

Source: snb.ch - Click to enlarge

Valuation gain on gold holdings

A valuation gain of CHF 2.2 billion was achieved on gold holdings, which were unchanged in volume terms. Gold was trading at CHF 40,045 per kilogram at end-March 2017 (end-2016: CHF 37,885).

SNB Balance Sheet for Gold Holdings, Q1 2017

Source: snb.ch - Click to enlarge

Profit on Swiss franc positions

The SNB maintains its profitability, last but not least, thanks to the reduction of the profitability of banks. When too many funds arrive on their accounts, they must deposit them on their sight deposit account at the SNB.

The profit on Swiss franc positions, which totalled CHF 0.5 billion, essentially resulted from the negative interest on sight deposit account balances.

SNB Result for Swiss Franc Positions, Q1 2017

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SNB Liabilities

Sight deposits is the biggest part of SNB interventions

Banknotes in circulation: -1.9 bn francs to 76 bn. CHF
The old form of a printing press, today a less important form of central bank interventions.

Provisions for currency reserves

As at end-March 2017, the SNB recorded a profit of CHF 7.9 billion, before the allocation to the provisions for currency reserves.

In accordance with art. 30 para. 1 of the National Bank Act (NBA), the SNB is required to set aside provisions permitting it to maintain the currency reserves at the level necessary for monetary policy. The allocation for 2017 will be determined at the end of the year.

SNB Liabilities and Sight Deposits, Q1 2017

Source: snb.ch - Click to enlarge