The Swiss National Bank (SNB) published today its biggest ever loss for the first half of the year totaling CHF 50.1 billion ($52.2 billion). The event comes on the back of the Swiss central bank’s own decision to abandon the floor it maintained under the EUR/CHF exchange rate.
The bulk of the loss totaling CHF 47.2 billion ($49.3 billion) came from the appreciation of the Swiss franc, while CHF 3.2 billion ($3.3 billion) were attributed to the recent decline in gold prices.
The composition of the SNB’s balance sheet warrants a close correlation of the institution’s financial results to the price developments on a variety of markets, including foreign exchange, gold and capital markets in general.
Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards to the annual result. The loss on foreign currency positions by the SNB has greatly impacted its bottom line for the year after year of gains realized due to its persistent policy.
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The loss is attributed to exchange rate-related losses on virtually all investment currencies. For the first half of 2015, these amounted to a total of CHF 52.2 billion.
Some components of the central bank’s balance sheet have performed solidly amid the relatively substantial negative interest rates which commercial banks have to pay to the SNB on their deposits at the central bank.
Interest income totaled CHF 3.5 billion ($3.6 billion) while dividend income contributed CHF 1.2 billion ($1.25 billion). The central bank registered a loss of CHF 3.9 billion ($4.1 billion) on interest-bearing paper and instruments as bond markets have remained volatile throughout the first half of 2015 and the expectations about the Federal Reserve moving on rates increased.
Consequently, the holdings of the SNB centered into equities registered gains due to the substantial rally in a number of stock markets throughout the first five months of the year. This component added CHF 4.1 billion ($4.3 billion) to the net result of the SNB.