Switzerland's central bank posted a record quarterly profit of 58.8 billion Swiss Francs ($64.34 billion) on Thursday in Q1, fuelled by the weakening Franc and strong equity markets.

The central bank's result exceeded economists' expectations at UBS, who had predicted a profit between 40 billion to 50 billion Swiss Francs, despite being lower than the 26.9 billion Francs profit recorded the previous year.

In addition, it surpassed the Swiss National Bank's (SNB) previous highest quarterly profit of 38.9 billion Francs from the second quarter of 2020, Reuters news agency reports.

During the quarter, the SNB earned a profit of 52.4 billion from its foreign currency positions, boosted by the early-year surge in global stock markets, with the MSCI World Price Index rising 10% in the first quarter.

The central bank holds approximately 170 billion Francs' worth of stocks, including shares in Google parent company Alphabet, Apple, and Starbucks as part of its extensive portfolio of foreign currency investments.

The depreciation of the Franc, with a decline of approximately 5% against the Euro and 7.5% against the Dollar in the first quarter, contributed to the increase in the Franc value of the SNB's foreign holdings. The total gains related to exchange rate fluctuations amounted to 38 billion Francs.

During the quarter, the SNB gained 8.9 billion Francs from the valuation of its gold holdings, as the price of the precious metal surged by 15% amid concerns about tensions in the Middle East.

The profits were offset by a loss of 2.4 billion Francs on the SNB's Franc positions, primarily due to the interest paid on the sight deposit accounts it holds for commercial banks.

"This was a very strong quarter for the SNB, with equities markets doing very well, but the biggest driver was the weakening of the Swiss Franc," stated UBS economist Alessandro Bee.

Bee warned that these results should not be interpreted as a signal of significant profits in the upcoming quarters.

"With such benign markets you don't normally see a rise in the value of gold, while the Dollar will probably weaken during the year, so the SNB won't get the currency gain in the future," he said.



  • SNB,
  • Swiss National Bank

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