The Swiss National Bank published interim results for the first three quarters of the year. After mixed mid-year results - the SNB reported an interim profit of CHF 1.2 billion - the last update brought the smile back to the SNB and all Swiss cantons. As of 30 September, the SNB reported a profit of CHF 33.7bn, which results mostly from a profit on foreign currency positions (30.3bn). Gold holdings appreciated by CHF 2.3bn. The central bank made a profit of CHF 1.5bn from negative interested it charges.
Looking at the details, the SNB benefited from a solid equity market that increased the valuation of its equity positions by CHF 14.4bn, plus a dividend income of CHF 2.5bn. On the other hand, the central bank suffered a valuation loss of CHF 4bn on its bond positions that was however offset by an interest income of CHF 6.8bn. Finally, the continuous depreciation of the Swiss franc over the summer months allowed the SNB to record exchange rate-related gains of CHF 10bn. Indeed, on a trade-weighted basis the Swiss franc fell more than 4.1% between July and September. The CHF depreciation was particularly pronounced against the EUR (-4.50%), the British pound (-4%) and most Scandinavian currencies.
Although Swiss cantons will almost surely receive a piece of the cake, they will have to wait to get the final result and the year is not over yet. The Swiss franc really had a nice ride over the last few months, however one cannot rule out a slight correction as investors are slowly trimming their risky positions as we move into the next year. On Tuesday morning, EUR/CHF has stabilized at around 1.16.
By Arnaud Masset