SNB likely to post a slight loss in the second quarter
Published: Wednesday, Jul 24th 2024, 11:00
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The Swiss National Bank (SNB) is likely to have posted a small loss in the second quarter of 2024. However, a profit of over CHF 50 billion is still expected for the semester as a whole.
UBS economists estimate a result for the SNB of between minus CHF 7 billion and plus CHF 3 billion for the period from April to June, which would correspond to an average loss of around CHF 2 billion. After a profit of almost 59 billion in the first quarter of 2024, this should result in a plus of 50 to 60 billion for the semester as a whole.
According to the UBS calculation on Wednesday, the SNB benefited from rising equity markets and a higher gold price in the second quarter. On the other hand, the stronger franc and slightly higher long-term interest rates weighed on the result.
In detail, the SNB is likely to have made a profit of more than CHF 4 billion on its equity portfolio of almost CHF 200 billion. Economists estimate the increase in the SNB's gold holdings at around CHF 4 billion.
On the other hand, currency movements are expected to result in a loss of CHF 5 to 10 billion. And the slight increase in yields on government bonds in the quarter under review will probably have reduced the SNB's result by around CHF 5 billion. However, this will be offset by recurring income from interest and dividends estimated at around CHF 4 billion.
The SNB will present its quarterly and half-yearly figures next week (31.7.).
Distribution remains uncertain
Despite the emerging half-year profit of over CHF 50 billion, a distribution to the Confederation and cantons in the coming year remains uncertain, according to UBS economists. According to the analysis, the SNB must first pay off last year's balance sheet loss of CHF 53 billion and make allocations to the provision for currency reserves.
If the SNB were to adhere to the 2020 rule of a minimum allocation of 10% of the current CHF 115 billion, it would have to generate a profit of at least CHF 65 billion for the year as a whole in order to make a minimum distribution. For a maximum distribution, the 2024 profit would even have to be more than 105 billion.
In principle, the results of the first half of the year should not be projected for the rest of the year, as the result is heavily dependent on financial market developments. According to UBS, global equities gained 11% in the first half of the year, which is well above the longer-term annual average of just over 6%.
Around half of the half-year profit also came from the weaker franc. Depending on how the global situation develops - politically or economically - the Swiss franc could also appreciate significantly again with its safe haven status, which according to UBS represents a "considerable risk" for the SNB result in the coming quarters.
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