The Swiss National bank faces billions of dollars in deficits in 2023.

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By vexwift.com

The Swiss National Bank posted an annual loss of 3 billion francs ($3.54 billion) for 2023.

The staggering amount has been attributed to the higher interest rates paid to banks which lodge money with it overnight.

The Swiss National Bank is the central bank of Switzerland. Stabilization of the Swiss economy is the responsibility of this bank and Swiss bank notes are issued here.

The Swiss National Bank said in a statement: “According to provisional calculations, the Swiss National Bank will report a loss in the order of CHF 3 billion for the 2023 financial year. The profit on foreign currency positions amounted to around CHF 4 billion. A valuation gain of CHF 1.7 billion was recorded on gold holdings. The loss on Swiss franc positions was CHF 8.5 billion.

The allocation to the provisions for currency reserves will be CHF 10.5 billion. After taking into account the negative distribution reserve of CHF 39.5 billion, the net loss will be around CHF 53 billion. At the end of 2023, the SNB’s equity capital amounted to around CHF 63 billion, with a balance sheet total of just under CHF 800 billion.

Pursuant to the provisions of the National Bank Act and the profit distribution agreement between the Federal Department of Finance and the SNB, the net loss precludes a distribution for the 2023 financial year. This affects both dividend payments to the SNB shareholders and the profit distribution to the Confederation and the cantons.

The Swiss National bank faces billions of dollars in deficits in 2023

The detailed report on the annual result with definitive figures will be released on 4 March 2024; the Annual Report will be published on 19 March 2024.”

In 2023, the Swiss National Bank (SNB) raised its policy interest rate twice, reaching 1.75%, in an effort to tackle inflation. However, this decision resulted in higher payouts to holders of sight deposit accounts.

Despite a decrease in overnight deposits due to the SNB’s sale of foreign currencies last year, sight deposit accounts still held 463 billion francs by the close of 2023.

According to SNB official website, SNB policy rate 1.75%
valid from 23.06.2023

Special rate (liquidity-shortage financing facility) 2.25%

Interest rate on sight deposits up to threshold 1.75% valid from 23.06.2023

Interest rate on sight deposits above threshold 1.25%

valid from 23.06.2023
Discount: 50 basis points

Threshold factor 25
valid from 01.12.2023

SARON 1.69%
fixing at the close of the trading day, 08.01.2024

Yield on Swiss Confederation bonds 0.838%
09.01.2024 (Spot interest rate for 10-year maturities).

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