Monetary policy SNB Schlegel: Building up equity takes precedence over profit distributions

The Swiss National Bank (SNB) is putting a damper on the hopes of the Confederation and cantons for a resumption of profit distributions. For the new SNB President Martin Schlegel, building up equity capital has priority.

The SNB's equity capital is currently far too low in view of the balance sheet risks, Schlegel said in Zurich on Friday, according to a summary of his speech. "Building up the SNB's equity capital must therefore take priority over profit distributions," he said.

The significant expansion of the SNB's balance sheet is an "important side effect" of the currency purchases required by the monetary authorities in the years following the global financial crisis. According to Schlegel, this leads to strong fluctuations in the SNB's annual result.

As a reminder: in the last two years, the SNB incurred losses of CHF 132.5 billion (2022) and CHF 3.2 billion (2023). The Confederation and the cantons came away empty-handed in each case. The last distribution was for 2021.

At the end of 2023, the SNB's equity amounted to around CHF 63 billion, with total assets of just under CHF 800 billion. The central bank's equity ratio had thus shrunk to 7.8 percent.

Things looked a little better recently: In the current year 2024, a profit of 62.5 billion francs was reported after nine months. This had recently raised faint hopes that the SNB's "injection" could soon start flowing again.

SDA