Swiss National Bank Says It Made CHF54 Billion Profit in 2017

By Brian BlackstoneFeaturesDow Jones Newswires

Switzerland's central bank said Tuesday that it made a profit of 54 billion Swiss francs ($55.2 billion) in 2017, citing higher global equity and bond prices as well as a weaker Swiss franc.

The Swiss National Bank said CHF49 billion of its profits were generated by its massive foreign-asset holdings, consisting mostly of bonds but also of some stocks. Those gains came from the underlying value of those assets denominated in euros and other non-Swiss currencies, and the added gain when those values were converted back into Swiss francs.

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The euro strengthened nearly 10% against the franc last year, and fetched CHF1.17 early Tuesday.

The SNB accumulated its huge reserves after years of foreign-exchange interventions, particularly during Europe's debt crisis, when it created francs and used them to purchase foreign assets in a bid to weaken the currency.

Its foreign-currency investments totaled more than CHF760 billion at the end of the third quarter.

The SNB said its gold holdings increased in value by about CHF3 billion last year, and its Swiss franc positions by CHF2 billion.

However, the SNB's hands are tied on what it can do with its profits. Whereas central banks such as the Federal Reserve transfer most of their profits to their governments, the SNB is in the early stages of a five-year profit-sharing arrangement whereby the maximum amount it can transfer to the Swiss federal and regional governments is CHF2 billion francs a year.

The SNB said it will allocate about CHF5 billion to its provisions that guard against future fluctuations in exchange rates, and most of the rest of its paper profits will go to its distribution reserve.

Write to Brian Blackstone at brian.blackstone@wsj.com

(END) Dow Jones Newswires

January 09, 2018 02:44 ET (07:44 GMT)