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SNB loses 6.8 billion in Q1/2018


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.

Good years of the Credit Cycle

This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.

Franc will rise again with crisis or inflation

With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.

And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary period the

  • EUR/CHF will fall to 0.90
  • and USD/CHF to 0.75.


And this will lead to a massive SNB loss around 150 billion CHF.


Some extracts from the official statement.


Interim results of the Swiss National Bank as at 31 March 2018

The Swiss National Bank (SNB) reports a loss of CHF 6.8 billion for the first quarter of 2018.
A valuation loss of CHF 0.2 billion was recorded on gold holdings. The loss on foreign currency positions amounted to CHF 7.0 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.




Income Statement, Q1 2018

Income Statement, Q1 2018

Source: - Click to enlarge

Loss on foreign currency positions

The loss on foreign currency positions amounted to CHF 7.0 billion.

Interest and dividend income totalled CHF 2.4 billion and CHF 0.6 billion respectively. This current income was offset by valuation losses: a loss of CHF 3.9 billion was recorded on interest-bearing paper and instruments. Furthermore, the negative stock market environment led to a loss of CHF 3.3 billion on equity securities and instruments. Exchange rate-related losses totalled CHF 2.8 billion.


SNB results 2018/Q1
(in bn CHF)
Profit BalanceSheet Profit in %
Total Profit on foreign currencies -7.0 821.3 -0.85%
Interest income (coupons) 2.4 821.3 0.29%
Dividend income 0.6 821.3 0.07%
Price changes in bonds -3.9 821.3 -0.47%
Price changes in equities -3.3 821.3 -0.40%
Exchange Rate Gains -2.8 821.3 -0.34%

SNB Profit on Foreign Currencies, Q1 2018

SNB Profit on Foreign Currencies, Q1 2018

Source: - Click to enlarge

Valuation loss on gold holdings

A valuation loss of CHF 0.2 billion was registered on gold holdings, which remained unchanged in volume terms. Gold was trading at CHF 40,643 per kilogram at end-March 2018 (end-2017: CHF 40,859).
SNB Results 2018/Q1
(in bn CHF)
Profit Balance Sheet Profit in %
Total Profit on Gold………………………….. -0.2 821.3 -0.02%

Percentage of gold to balance sheet

The percentage of gold compared to the total balance sheet is falling.


SNB Balance Sheet items
(in bn CHF)
2018/Q1 2017
Gold……………………………………… 42.3 42.5
Total Balance Sheet 821.3 843.3
Gold in % of Balance Sheet 5.15% 5.04%


Balance Sheet

The balance sheet has fallen by over 22 bn. francs by 2.61%

2018/Q1 2017 Increase in %
SNB balance sheet in CHF………………. 821.3 843.3 -2.61%
Swiss nominal GDP in CHF 664.6 662.7 0.29%
% of GDP 123.48% 127.97%

SNB Balance Sheet for Gold Holdings for Q1 2018

SNB Balance Sheet for Gold Holdings for Q1 2018

Source: - 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, largely resulted from negative interest charged on sight deposit account balances.

Negative Interest rates

Furthermore, the SNB harms the Swiss economy, when it reduces the profits of Swiss banks by negative interest rates. But with this measure she maintains her own profitability.


2018/Q1 2017 Change in %
Income through negative interest rates 0.5 2.02 -87,86%
SNB balance sheet 821.3 843.3 -2.61%
in % of balance sheet 0.06 0.24%

SNB Result for Swiss Franc Positions for Q1 2018

SNB Result for Swiss Franc Positions for Q1 2018

Source: - Click to enlarge

SNB Liabilities

Electronic Money Printing: Sight Deposits

Sight deposits is the biggest part of SNB interventions.


2018/Q1 2017 Change in%
Total Sight Deposits 575.9 573,7 0.38%
Balance Sheet 821.3 843.3 12.97%
% of balance sheet 70.12% 68.03%

Paper Printing

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 2018, the SNB recorded a loss of CHF 6.8 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 2018 will be determined at the end of the year.

SNB Liabilities and Sight Deposits for Q1 2018

SNB Liabilities and Sight Deposits for Q1 2018

Source: - Click to enlarge

Provisions for Currency Reserves are insufficient

Obviously the provisions for losses of

  • 5 billion per year

are insufficient to cover the 150 billion CHF loss with the next crisis.

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George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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