SNB’s Gold Hoard Drives Return to Profit for First Nine Months

(Bloomberg) — Switzerland’s central bank swung to a profit as higher gold prices offset fallout from the strength of the franc.

Results for the first nine months of the year showed a gain of 12.6 billion francs ($15.7 billion), the Swiss National Bank said in a statement on Friday. That compares to a 15.3 billion-franc loss in the first half, and is in line with a forecast by economists at UBS Group AG.

While the SNB’s earnings have no bearing on monetary policy, they do have minor fiscal implications. The return to profit raises the prospect that the central bank could make another payout to the government and cantons. Such distributions were halted following poor earnings in 2022 and 2023 but resumed this year after record profit in 2024.

The SNB reported a valuation increase of 22.9 billion francs on the 1,040 tons of gold it holds in its vaults, because of a jump in bullion prices.

Foreign-currency positions — normally the top earner — yielded a loss of 9 billion francs. Gains in the franc, which curb returns from foreign assets, offset proceeds of more than 20 billion francs from a good performance of the central bank’s stock portfolio.

The SNB suffered a loss in the first half of the year because of the strength of the currency. This time round, franc positions did weigh on earnings — costing 0.9 billion francs — mainly because of interest payments on commercial bank deposits. As the SNB has reduced its deposit rate to zero, those expenses are set to decline.

UBS economists Alessandro Bee and Florian Germanier had forecast a profit of between 10 and 15 billion francs for the first nine months. But they stressed that a payout shouldn’t be taken for granted at this stage, given market volatility.

“The franc’s rise against the euro in recent weeks alone reduced the result by about 4 billion francs,” they said in a report this week.

The SNB is exposed to currency swings because of the vast size of its balance sheet, which is about as big as Switzerland’s gross domestic product. Since much of its reserves are held in foreign currencies, appreciations of the franc — including this year’s more than 13% against the dollar and more than 1.2% against the euro — can inflict big losses.

The SNB’s balance sheet became so bloated through years of foreign-exchange interventions to weaken the currency.

The central bank has since pivoted toward more judicious action that may make less of a financial impact in future. Officials remain prepared to intervene however, and several analysts flagged last week that the SNB may currently be stepping into markets again.

A preliminary reading of the central bank’s full-year results will be published on Jan. 9.

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