SNB’s $143 billion loss in nine months casts doubt on government payout

The Swiss National Bank (SNB) reported a loss of 142.4 billion francs ($143 billion) for the first nine months as turmoil in global currency markets took a toll on the value of its foreign-exchange portfolio.

The central bank’s foreign-currency positions resulted in a loss of 141 billion francs, and it also saw a valuation loss on its gold holdings and on its Swiss currency positions.

The numbers puts the SNB on course for the highest annual loss on record. While those results won’t influence monetary policy, they still render it increasingly unlikely that the institution will be able to make a payout to the Swiss government and cantons. That would only be the second time in the central bank’s more than 100-year history that it would have to skip such a payment.

The SNB spent more than a decade intervening in currency markets to stop the Swiss franc from appreciating, resulting in a portfolio of foreign reserves of more than 800 billion francs.

It’s main monetary policy tool now is interest rates — it abandoned negative rates in late September — but the SNB has said it’s still willing to carry out interventions in future.

The central bank raised its key rate to -0.25% in June and to 0.5% last month. It still made 69.3 million francs in the third quarter off that negative rates regime, bringing the overall tally since it started charging banks for sight deposits in 2015 to 11.9 billion francs, according to Bloomberg calculations.

The SNB is a joint-stock company, with both public-sector and private shareholders, and its earnings are calculated by comparing asset prices at the start and end of each period. It’s therefore at risk of big swings in profitability and interim losses can still change by year-end.

—Bloomberg