The Swiss National Bank (SNB) estimated on Monday the largest yearly loss in its 116-year existence. The bank lost $143 billion (132 billion Swiss francs) in 2022, as the value of its share and bond portfolio was negatively impacted by declining equity and fixed-income markets. The loss means that the SNB will not be able to distribute any profits to central and regional Swiss governments for 2022.
The preliminary figure released on Monday was far higher than the previous record loss of 23 billion francs recorded in 2015. It represented a reversal from a profit of 26 billion francs in 2021, The Star reported. The loss indicates that the payments to its shareholders will be affected too.
SNB suffered a loss of 131 billion francs from its foreign exchange positions after it purchased over 800 billion francs in stocks and bonds during a protracted drive to devalue the Swiss franc.
Last year, as central banks all over the world, increased interest rates to fight inflation, global stock markets weakened and bond prices plunged. Exchange rate losses were caused by the strong Swiss franc, which in July surged above parity against the euro, as per Reuters.
According to analysts, SNB Chairman Thomas Jordan also increased interest rates three times in 2022 in an effort to reduce excessive Swiss inflation.
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While the loss is “regrettable,” interim profits had predicted such an outcome, the conference of cantonal finance chiefs told SDA, according to Bloomberg.
The SNB’s gold holdings were the only bright spot — they totalled 1,040 tonnes at the end of 2021 and increased in value by $400 million francs in 2022.
It’s unlikely that the SNB will make amends in its policy, Reuters reported. The bank is slated to release the detailed annual figures on March 6.
(With inputs from agencies)
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