September 15, 2022
  • September 15, 2022

Swiss National Bank posts $34 billion loss as bond losses bite

By on April 28, 2022 0

The logo of the Swiss National Bank (SNB) is pictured on its building in Bern, Switzerland April 2, 2022. REUTERS/Arnd Wiegmann

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ZURICH, April 28 (Reuters) – The Swiss National Bank reported a loss of 32.8 billion Swiss francs ($33.75 billion) in the first quarter on Thursday, as falling bond prices and the rising franc weighed on the value of its foreign currency investments. .

The bank suffered a loss of 36.8 billion francs on its foreign currency investments accumulated during its campaign to tame the franc.

The bank made a profit of 1.6 billion francs on interest from its bond portfolio and 800 million francs on dividends from stocks and shares it holds in companies such as Starbucks (SBUX.O) and the owner of Google Alphabet (GOOGL.O).

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But this was erased by a sharp loss in its bond portfolio, which represents 80% of the 977 billion francs held by the SNB in ​​foreign currency investments.

As bond prices fell earlier this year as investors anticipated higher central bank interest rates battling rising inflation, the SNB posted a CHF25.1 billion loss in value. on his fixed income assets.

The central bank also recorded a loss of 10.7 billion francs on its equity portfolio and a loss of 3.4 billion francs linked to the exchange rate, as the more expensive Swiss franc reduced the value of its foreign investments when it is converted back into francs.

The franc rose earlier this year as investors sought safe havens after the outbreak of war in Ukraine, while stock markets also fell.

The flight for safety pushed up the price of gold during the period, with the SNB realizing a capital gain of 4.2 billion francs on its gold holdings.

But she only made a tiny profit of 10.6 million francs on her Swiss franc positions, mainly thanks to the negative interest rates she charges to some national banks for parking their money at her place for the day. on the next day. The negative interest rate is one of the tools used by the SNB to block the rise of the Swiss franc.

($1 = 0.9718 Swiss francs)

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Reporting by John Revill; edited by Riham Alkousaa and Jason Neely

Our standards: The Thomson Reuters Trust Principles.