Two Lean Years of No Distributions Behind, Swiss National Bank Announces Profit of 80 Billion Francs
The Swiss National Bank (SNB) has announced a profit of around 80 billion francs for the 2024 business year, marking an end to two lean years without distributions. Of this, three billion francs will be distributed to the public, with the cantons receiving two-thirds and the federal government one-third.
The windfall of funds comes at a time of strain in many public budgets, and while the one-time payment is welcome, it should not be seen as a free pass for political recklessness. The pressing questions of cost-cutting measures and state reform remain.
Global Financial Markets Drive Success
The SNB’s exceptional result is primarily due to the global financial markets. Three asset classes in particular have seen significant value increases in 2024:
Gold: The SNB’s 1,040-ton gold reserve gained around 21 billion francs in value, largely due to the 35% surge in gold prices. Many emerging markets have been rapidly building up their gold reserves, a key factor in the price rally. Foreign currency investments: The US dollar appreciated by 7% against the franc, increasing the value of the SNB’s dollar-based investments. The SNB’s foreign currency positions generated a profit of 67 billion francs. Stocks: The global stock market saw a 15% increase, with the SNB’s quarter of its investments in stocks resulting in a valuation gain of almost 30 billion francs.
These developments enabled the SNB to quickly recover from the significant losses of the 2022 stock market year, with the balance sheet loss initially standing at 53 billion francs. After adjustments to the reserves and filling the gap in the distribution reserve, the SNB’s balance sheet profit stands at 16 billion francs.
Exception Rather Than Rule
While the current profit is welcome, a repeat performance is unlikely. The market environment that made the success of 2024 possible is unusual. Stocks and gold have simultaneously seen strong growth – a rare phenomenon. The dollar has also gained significantly in value, which is not a regular occurrence.
UBS estimates the SNB’s long-term profit potential at 10 to 15 billion francs annually. This would be sufficient for smaller distributions, but 80 billion francs, as seen in 2024, are an exceptional outlier.
For the federal government and cantons, it is to be hoped that they will use the three billion francs wisely. It is clear, however, that the SNB will not be able to fill the public coffers so generously every year.