Gold, Currencies Boost SNB Profit as Bullion Referendum Looms
Oct. 31 (Bloomberg) — The Swiss National Bank reported a profit of 28.5 billion francs ($30 billion) for the first nine months of the year, benefiting from a rise in the value of its gold and foreign currency holdings.
The gain on its 1,040 tons of gold was 3.3 billion francs, while the profit on its foreign-currency positions amounted to 25.2 billion francs, the central bank said in a statement today.
“Exchange rate-related losses on the euro were more than offset by gains on other investment currencies, in particular the U.S. dollar and the pound,” it said.
The central bank’s hoard of gold is the target of an initiative in Switzerland that would require the SNB to hold at least 20 percent of its total assets in bullion and never sell any. The national referendum is scheduled for Nov. 30, with recent polls showing voters still undecided.
In Swiss franc terms, gold gained more than 7 percent in the first three quarters of the year, data compiled by Bloomberg shows. The franc climbed 1.7 percent against the euro during that time span, buoyed by the European Central Bank’s expansive monetary policy. Against the dollar, the franc slipped 6.7 percent.
The government and the SNB oppose the “Save Our Swiss Gold” initiative, saying it would cause the central bank’s credibility to suffer and impede policy making. It could also reduce the SNB’s annual profit distribution to cantonal governments, board member Fritz Zurbruegg said in an interview this week.
Balance Sheet
The SNB’s balance sheet has ballooned by more than a third in the past three years due to the currency interventions it waged to defend its cap of 1.20 per euro on the franc. The referendum was initiated by a few members of the Swiss People’s Party, who argue it will help preserve national wealth.
Last year, the SNB suffered a 9.1 billion franc loss due to a drop in the price in gold, forcing it to scrap its dividend to shareholders and an annual payment to the Swiss cantons.
The SNB is listed on the Zurich stock exchange. About 55 percent of shares are held by public institutions, including cantonal governments and cantonal banks. The remaining portion is largely owned by private investors. The federal government doesn’t hold any shares.
To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net To contact the editors responsible for this story: Fergal O’Brien at fobrien@bloomberg.net Zoe Schneeweiss, Jana Randow
