SNB’s Record-High Profit Challenges Prospects for Distributions to Federal Government and Cantons

The Swiss National Bank (SNB) has reported a profit of 59 billion francs in the first quarter, primarily due to the weakening of the franc. This record-high profit may not lead to a distribution to the state at the end of the year as SNB’s assets are mainly foreign currency investments, and a weaker franc increases profits when converted back to francs. However, SNB also lost money on bonds due to increased yields on American government bonds.

While this quarterly profit is impressive, it is important to note that the real impact will be determined by SNB’s annual results. In order for any distribution to be possible, SNB would need to generate a profit of 65 billion francs for the year. Given uncertainties in financial markets and potential for the franc to appreciate again over time, it is unlikely that SNB will reach these necessary profit levels for distribution to federal government and 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 size of SNB balance sheet mean even small price corrections can have major consequences for profits. It is best to remain cautious about the possibility of profit distributions in future.