The Swiss National Bank (SNB) confirmed the provisional calculations for the 2023 annual results on Monday. According to the final calculations, losses stand at 3.2 billion Swiss francs, following the deficit of 132.5 billion Swiss francs last year.

The SNB earned 4 billion Swiss francs on foreign currency positions, giving it a valuation gain of 1.7 billion Swiss francs on its gold holdings. But the losses on the Swiss franc positions came to 8.5 billion Swiss francs, with operating expenses of 400 million Swiss francs. If the negative distribution reserve of 39.5 billion Swiss francs is included, it had net accumulated losses of 53.2 billion Swiss francs.

Sore Shortfall

As the national bankers have already warned, net accumulated losses mean no distribution will be made to its shareholders, the federal government or cantons for the second time in a row; the SNB billions will likely be sorely missed by the state this year.

On the other hand, the currency keepers, the National Bank, raised its own provisions for currency reserves by 10.5 billion to 115.8 billion Swiss francs. Last year, 9.6 billion francs were allocated to currency reserves. The SNB is aiming for a solid balance sheet with sufficient capital to be in a position to absorb large losses, as noted in the Monday announcement.

Planning for Weak Growth

When determining the allocation for one year, it considers twice the average nominal growth of the gross domestic product (GDP) of the last five years.

To ensure that the provisions for currency reserves are adequately funded even when nominal GDP growth rates are low, the SNB opted for an annual minimum allocation of 10 percent of the holdings at the end of the previous year – corresponding to the above-mentioned 10.5 billion Swiss francs.