This week, the Swiss National Bank (SNB) announced a record quarterly profit for the first quarter of 2024. The result was largely predicted after the SNB made a surprise interest rate cut, which led to a weaker Swiss Franc.
Switzerland’s central bank is unusual. It is privately owned (mainly by a German citizen) but distributes much of its profit to the nation’s cantons and federal government. This feature adds to the politicisation of monetary policy in Switzerland as it increases the likelihood voters and politicians view the bank primarily as a cash generator rather than the custodian of a stable inflation.
Bumper profits of CHF 58.8 billion in the first quarter of 2024 resulted mainly from a weakening Swiss Franc. Relative to the Euro, the Swiss Franc lost around 5% of its value over the first quarter of the year. Compared to the USD it lost 7%.
In addition to a profit of CHF 52.4 billion on its foreign currency holdings, the SNB made a gain of CHF 8.9 billion on its gold holdings over the first three months of 2024. These two gains were diminished slightly by a CHF 2.4 billion loss on the bank’s Swiss Franc balance.
However, profit distributions to cantons and the federal government are unlikely. Gains in one quarter can be wiped out by loses in another. Strong volatility is the norm rather than the exception, according to the bank. In 2023, the SNB made a profit of CHF 26.9 billion in the first quarter only to end the year with a CHF 3.2 billion loss.
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SNB article (in French) – Take a 5 minute French test now
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