The SNB’s Record Profit May Not Lead to Distributions: Balancing Fiscal Responsibility and Investment Risks

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

While the SNB’s annual results will ultimately determine the real impact of this profit, financial politicians are advised not to budget for distributions based on this initial success. This is because there is potential for savings in other areas, such as public administration wages which saw a substantial increase compared to the national average. Additionally, given the uncertainties in financial markets and the SNB’s balance sheet size, even small price corrections can have major consequences for profits. Therefore, it is important for financial politicians to remain cautious about future profit distributions from the SNB.