The Swiss National Bank on Monday, July 31, reported that following the results of the second quarter, this financial institution recorded a loss of 13.2 billion Swiss francs ($15.14 billion).
The lender, reporting on the financial result for the last quarter, noted that due to the increase in interest rates by other central banks, the value of its large bonds showed a downward trend.
The bank lost 8.08 billion francs ($9.29 billion) on its foreign currency positions. The total amount of these positions of the financial institution is 742 billion francs ($852.4 billion). The lender notes that this negative result is a consequence of the fall in the value of the bonds. The financial institution claims that the negative situation arose against the background of investors’ concerns about the continuation of the implementation of the strategy of raising interest rates by the US Federal Reserve, the European Central Bank, and other organizations with regulatory powers.
The Swiss central bank also lost 3.14 billion francs ($3.61 billion) in its gold reserves in the second quarter. Lower prices have reduced the value of the precious metal owned by the financial institution.
The first quarter of 2023 was more positive for the bank. At the end of this period, the financial institution recorded a profit of 26.9 billion francs ($30.9 billion). The lender’s half-year profit to 13.7 billion francs ($15.7 billion).
The financial institution reports that the final result for the first half of 2023 was supported by a profit of 900 million francs ($1.03 billion) from interest payments, primarily due to emergency liquidity provided by Credit Suisse and UBS. The lender lent 168 billion francs ($193 billion) to these banks. These funds were intended to initially provide support to Credit Suisse, and after that to facilitate the process of takeover of the bankrupt financial institution in the framework of the procedure organized by the Swiss authorities.
As of the end of June, the outstanding amount of the bank, which also includes loans under COVID-19, was 66.7 billion francs ($76.6 billion).
According to the results of the second quarter, the financial institution also suffered losses of 1.88 billion francs ($2.16 billion) on its positions in the national currency of Switzerland. This result, according to experts, is largely a reflection of the resumption of interest payments on term deposits within the framework of restrictive monetary policy.
In the second quarter, the financial institution also paid interest on SNB bonds and repo transactions. These payments were made as part of operations to absorb liquidity and bring the market interest rate in line with the lender’s discount rate, which rose to 1.75% in June.
As we have reported earlier, Swiss National Bank Preps Wholesale CBDC Test.