06.03.2015, 11:16
Annual result of the Swiss National Bank for 2014
OREANDA-NEWS. The Swiss National Bank (SNB) is reporting a profit of CHF 38.3 billion for the year 2014
(2013: loss of CHF 9.1 billion).
The profit on foreign currency positions amounted to CHF 34.5 billion. A valuation gain of CHF 4.1 billion was recorded on gold holdings.
For the financial year just ended, the SNB has set the allocation to the provisions for currency reserves at CHF 2.0 billion. The distributable profit remaining after this allocation is CHF 36.3 billion, which will be offset against the negative distribution reserve of CHF 6.8 billion. With the remaining profit, dividends can be paid and the ordinary distribution of profits of CHF 1 billion can be made to the Confederation and the cantons. Thus, the distribution reserve after appropriation of profit would amount to CHF 28.5 billion. The profit distribution agreement between the SNB and the Federal Department of Finance (FDF) stipulates that the distribution will be increased for the financial year in question if the distribution reserve after profit appropriation exceeds CHF 10 billion. The SNB and the FDF agreed to a supplementary distribution of CHF 1 billion, so that the total distribution to the Confederation and the cantons for 2014 will amount to CHF 2 billion. According to the proposal to the General Meeting of Shareholders, the shareholders will receive CHF 1.5 million in the form of dividends. The remaining profit will be allocated to the distribution reserve.
The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets. Consequently, substantial fluctuations in the quarterly and annual results are to be expected. At present, it is not possible to make any predictions about the 2015 annual result. As the SNB has stressed on several occasions, in view of the considerable volatility in its results, it does not exclude the possibility that, in some years, profit distributions will have to be suspended completely, or can only be carried out on a reduced scale.
Profit on foreign currency positions
In 2014, the SNB recorded CHF 7.7 billion in interest income and CHF 1.8 billion in dividend income from foreign currency investments. The generally lower interest rate level resulted in price gains of CHF 8.7 billion on interest-bearing paper and instruments. Equity securities and instruments benefited from the favourable stock market environment and contributed CHF 4.4 billion to the net result.
Overall, exchange rate-related gains amounted to CHF 11.8 billion. Exchange rate-related losses on the euro were more than offset by gains on other investment currencies, in particular the US dollar and the pound sterling.
Taking the various other income statement elements into account, the overall result for foreign currency positions was a profit of CHF 34.5 billion (2013: CHF 3.1 billion). Valuation gain on gold holdings At CHF 38,105 per kilogram, the price of gold was 11% higher than at the end of 2013 (CHF 34,195). This gave rise to a valuation gain of CHF 4.1 billion on the unchanged holdings of 1,040 tonnes of gold (2013: valuation loss of CHF 15.2 billion).
Profit on Swiss franc positions
Swiss franc positions recorded a profit of CHF 276.6 million overall (2013: loss of CHF 96.4 million), essentially comprising price gains of CHF 217.8 million and interest income of CHF 74.8 million.
Provisions for currency reserves
In its annual review, the Bank Council resolved that it would once again apply twice the average nominal GDP growth rate for the previous five years as the basis for calculating the allocation for the 2014 financial year, given the high market risks present in the SNB balance sheet.
The allocation to the provisions therefore amounts to CHF 2.0 billion. The allocation is considerably lower than in the previous year. This is attributable to the fact that the average period for the calculation of the allocation upon which the 2014 financial year is based comprises several years with low nominal GDP growth rates. At 1.8%, average nominal GDP growth was therefore much lower than in the relevant previous period (2.9%).
The profit on foreign currency positions amounted to CHF 34.5 billion. A valuation gain of CHF 4.1 billion was recorded on gold holdings.
For the financial year just ended, the SNB has set the allocation to the provisions for currency reserves at CHF 2.0 billion. The distributable profit remaining after this allocation is CHF 36.3 billion, which will be offset against the negative distribution reserve of CHF 6.8 billion. With the remaining profit, dividends can be paid and the ordinary distribution of profits of CHF 1 billion can be made to the Confederation and the cantons. Thus, the distribution reserve after appropriation of profit would amount to CHF 28.5 billion. The profit distribution agreement between the SNB and the Federal Department of Finance (FDF) stipulates that the distribution will be increased for the financial year in question if the distribution reserve after profit appropriation exceeds CHF 10 billion. The SNB and the FDF agreed to a supplementary distribution of CHF 1 billion, so that the total distribution to the Confederation and the cantons for 2014 will amount to CHF 2 billion. According to the proposal to the General Meeting of Shareholders, the shareholders will receive CHF 1.5 million in the form of dividends. The remaining profit will be allocated to the distribution reserve.
The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets. Consequently, substantial fluctuations in the quarterly and annual results are to be expected. At present, it is not possible to make any predictions about the 2015 annual result. As the SNB has stressed on several occasions, in view of the considerable volatility in its results, it does not exclude the possibility that, in some years, profit distributions will have to be suspended completely, or can only be carried out on a reduced scale.
Profit on foreign currency positions
In 2014, the SNB recorded CHF 7.7 billion in interest income and CHF 1.8 billion in dividend income from foreign currency investments. The generally lower interest rate level resulted in price gains of CHF 8.7 billion on interest-bearing paper and instruments. Equity securities and instruments benefited from the favourable stock market environment and contributed CHF 4.4 billion to the net result.
Overall, exchange rate-related gains amounted to CHF 11.8 billion. Exchange rate-related losses on the euro were more than offset by gains on other investment currencies, in particular the US dollar and the pound sterling.
Taking the various other income statement elements into account, the overall result for foreign currency positions was a profit of CHF 34.5 billion (2013: CHF 3.1 billion). Valuation gain on gold holdings At CHF 38,105 per kilogram, the price of gold was 11% higher than at the end of 2013 (CHF 34,195). This gave rise to a valuation gain of CHF 4.1 billion on the unchanged holdings of 1,040 tonnes of gold (2013: valuation loss of CHF 15.2 billion).
Profit on Swiss franc positions
Swiss franc positions recorded a profit of CHF 276.6 million overall (2013: loss of CHF 96.4 million), essentially comprising price gains of CHF 217.8 million and interest income of CHF 74.8 million.
Provisions for currency reserves
In its annual review, the Bank Council resolved that it would once again apply twice the average nominal GDP growth rate for the previous five years as the basis for calculating the allocation for the 2014 financial year, given the high market risks present in the SNB balance sheet.
The allocation to the provisions therefore amounts to CHF 2.0 billion. The allocation is considerably lower than in the previous year. This is attributable to the fact that the average period for the calculation of the allocation upon which the 2014 financial year is based comprises several years with low nominal GDP growth rates. At 1.8%, average nominal GDP growth was therefore much lower than in the relevant previous period (2.9%).
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