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Provisional Results 2018: Will the SNB ever make profits again?


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: Rising Bond and Stock Prices until 2017

Until 2017, the SNB was able to profit on a secular tendency where both stock and bond prices (until 2016) were rising. This led to rising profits, that compensated for the ever rising Swiss franc.

One new negative effect of huge balance sheet

In an interview with Swiss Eco television program, SNB vice president Fritz Zurbruegg stated that the SNB is able to intervene thanks to its big balance sheet.

But what happens, when the huge balance sheet is not able to compensate for

  • the Swiss franc that historically improves by 1% per year in average.

This means that the SNB must obtain a

  • bond yield of 1% per year
  • a dividend yield of 1% or
  • take advantage of rising stock prices.


  • The SNB bought bonds at a time of very low bond yields under < 1% (average duration < 5yrs)
  • The typical dividend yield is under 2%. Some stocks like Apple may pay less dividends in the future with falling profits. Apple is the biggest SNB holding.
  • The stock market rallye is finished since the Fed started to hike rates and global uncertainties remain.


The SNB can take the 1% from the Swiss economy, the so-called negative rates.



From the official press release

Confederation and cantons to receive distribution of CHF 2 billion

According to provisional calculations, the Swiss National Bank (SNB) will report a loss in the order of CHF 15 billion for the 2018 financial year. The loss on foreign currency positions amounted to CHF 16 billio n. A valuation loss of CHF 0.3 billion was recorded on gold holdings. The net result on Swiss franc positions amounted to CHF 2 billion.

The allocation to the provisions for currency reserves will be approximately CHF 5.4 billion. After taking into account the distribution reserve of CHF 67.3 billion, the net profit will be in the region of CHF 47 billion. This will allow a dividend payment of CHF 15 per share, which corresponds to the legally stipulated maximum amount, as well as a profit distribution to the Confederation and the cantons of CHF 1 billion.

The Confederation and the cantons are also entitled to a supplementary distribution of CHF 1 billion as the distribution reserve after appropriation of profit exceeds CHF 20 billion. One-third of any such distribution – in this case a total of CHF 2 billion – is allocated to the Confederation and two-thirds to the cantons. After these payments, the distribution reserve will amount to around CHF 45 billion.

A detailed report on the annual result with definitive figures will be released on 4 March 2019; the Annual Report will be published on 21 March 2019.

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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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