The Swiss National Bank (SNB) reported a record-high profit of 59 billion francs in the first quarter, primarily due to the weakening of the franc. However, this may not lead to a profit distribution to the state at the end of the year as SNB’s assets are mainly foreign currency investments and a stronger franc would decrease profits when converted back to francs. Additionally, SNB also lost money on bonds due to increased yields on American government bonds.
Despite the impressive quarterly profit, it is unlikely that SNB will reach the necessary profit levels for a distribution to federal government and cantons. The uncertainties in financial markets with potential for franc appreciation again over the course of the year make it challenging for SNB to achieve its annual results of 65 billion francs. Therefore, 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 an 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 the possibility of profit distributions in the future.