UPDATE 1-Swiss National Bank makes 2.075 billion franc Q3 loss

  • 10/29/2021
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(Adds further detail, background) ZURICH, Oct 29 (Reuters) - The Swiss National Bank posted a loss of 2.075 billion francs during its third quarter, the central bank reported on Friday, as profits from its bond holdings and negative interest rates failed to cover losses from weaker equity markets and the stronger Swiss franc. The SNB, which holds 23% of its 957 billion francs of foreign currency assets in stocks, reported a loss of 2.354 billion Swiss francs from its foreign currency positions in the three months to the end of Sept. The MSCI All Country World Price Index fell by 1.7% during the quarter, as concerns about supplier bottlenecks, energy supplies and inflation weighed on companies and markets. The SNB made a profit of 109.5 million Swiss francs from a valuation gain on its gold holdings, while it made a profit of 250 million francs from its Swiss franc positions, mainly the negative interest rates it charges commercial banks for parking money overnight. Interest and dividend income in the first nine months amounted to 5.5 billion francs and 2.9 billion francs respectively, while price losses of 13.7 on bonds were recorded as fixed incomed investments lost value and yields rose. The SNB’s equities gained 22.2 billion francs in value, the SNB said, although this gain was wiped out by 25.3 billion francs in exchange-related losses due to the stronger Swiss franc. “The SNB lost money from lower bond valuations and the weaker equity market, but the result would have been even worse without the contribution from negative interest rates, dividend payments on the shares it holds and interest payments on bonds,” said UBS economist Alessandro Bee. “The gains made from the weakening of the franc versus the dollar have been more or less cancelled out by the rise of the currency versus the euro.” Still, the loss would not be too serious for the central bank, which posted a 43.5 billion franc profit during the first half of the year. With a distribution reserve of 90.943 billion francs, the central bank should still be able to make a maximum payout to the Swiss government of 6 billion francs for 2021, Bee said. Reporting by John Revill and Riham Alkousaa; editing by Brenna Hughes Neghaiwi

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