Record Profit of 59 Billion Francs for Swiss National Bank, but Will it Be Enough to Distribute to the Federal Government and Cantons?

The Swiss National Bank (SNB) reported a record-high profit of 59 billion francs in the first quarter, mainly due to the weakening of the franc. However, the real impact of this impressive quarterly result will be determined by the SNB’s annual results. In order for any distribution to be possible, the SNB would need to generate a profit of 65 billion francs for the year.

The SNB’s assets are mainly foreign currency investments, so a weaker franc increases profits when converted back to francs. However, the SNB also lost money on bonds due to increased yields on American government bonds. Given the uncertainties in financial markets and the potential for the franc to appreciate again over the course of the year, it is unlikely that the SNB will reach the necessary profit levels for a distribution to the federal government and the cantons.

Financial politicians are advised not to budget for SNB distributions as there is potential for savings in other areas such as public administration wages which saw a substantial increase compared to national average. The unpredictable nature of financial markets and SNB’s balance sheet size mean that even small price corrections can have major consequences for profits. Therefore, it is best to remain cautious about future profit distributions possibilities.