Schweizerische Nationalbank : Interim results of the Swiss National Bank as at 31 March 2020

Press release

Communications

P.O. Box, CH-8022 Zurich Telephone [phone] [e-mail]

Zurich, 23 April 2020

Interim results of the Swiss National Bank as at 31 March 2020

The Swiss National Bank reports a loss of CHF 38.2 billion for the first quarter of 2020.

The first quarter of 2020 was dominated by the global spread of coronavirus. The measures taken to contain the pandemic seriously impacted the financial markets from mid-quarter onwards, and accordingly also the SNB's result. The loss on foreign currency positions amounted to CHF 41.2 billion. A valuation gain of CHF 2.8 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 0.3 billion.

The SNB's financial result depends largely on developments in the gold, foreign exchange and capital markets. Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result.

Loss on foreign currency positions

The loss on foreign currency positions amounted to CHF 41.2 billion.

Interest and dividend income totalled CHF 2.1 billion and CHF 0.7 billion respectively. A gain of CHF 5.1 billion was recorded on interest-bearing paper and instruments. By contrast, the unfavourable stock market environment led to a loss of CHF 31.9 billion on equity securities and instruments. Exchange rate-related losses totalled CHF 17.1 billion.

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Valuation gain on gold holdings

A valuation gain of CHF 2.8 billion was recorded on gold holdings, which remained unchanged in volume terms. Gold was trading at CHF 49,923 per kilogram at the end of March 2020 (end- 2019: CHF 47,222).

Profit on Swiss franc positions

The profit on Swiss franc positions totalled CHF 0.3 billion. It largely resulted from negative interest charged on sight deposit account balances.

Provisions for currency reserves

As at end-March 2020, the SNB recorded a loss of CHF 38.2 billion before the allocation to the provisions for currency reserves.

In accordance with art. 30 para. 1 of the National Bank Act (NBA), the SNB is required to set aside provisions permitting it to maintain the currency reserves at the level necessary for monetary policy. The allocation for the current financial year is determined at the end of the year.

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Income statement, 1 January-31 March 20201

In CHF millions

	Item no.		Q1 2020		Q1 2019		Change
	in Notes
Net result from gold		2 809.4	880.5		+ 1 928.9
Net result from foreign currency
positions	1		- 41 199.1	29 335.4		- 70 534.5
Net result from Swiss franc positions	2	267.1	586.6		- 319.5
Net result, other			- 8.7		- 8.5		- 0.2
Gross income			- 38 131.3	30 794.0		- 68 925.3
Banknote expenses		0.0	0.0		-
Personnel expenses			- 46.4		- 45.1		- 1.3
General overheads			- 37.6		- 37.4		- 0.2
Depreciation on tangible assets			- 9.7		- 7.4		- 2.3
Interim result			- 38 225.1	30 704.1		- 68 929.2

1 Unaudited. The external auditors only audit the annual financial statements.

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Balance sheet as at 31 March 20201

Assets

In CHF millions

	31.03.2020		31.12.2019		Change
Gold holdings	51	920.3	49 110.9		+ 2 809.4
Foreign currency investments2	781	440.8	794	015.3		- 12 574.5
Reserve position in the IMF	1	291.9	1	368.7		- 76.8
International payment instruments	4	164.9	4	380.6		- 215.7
Monetary assistance loans		476.5			276.2		+ 200.3
Claims from US dollar repo transactions3	5	876.4			-		+ 5 876.4
Claims from Swiss franc repo transactions		642.0	6	529.0		- 5 887.0
Swiss franc securities	3	978.7	4	074.3		- 95.6
Secured loans4	1 111.0			-		+ 1 111.0
Tangible assets		446.2			449.8		- 3.6
Participations		136.4			135.3		+ 1.1
Other assets		825.9			616.3		+ 209.6
Total assets	852	310.9	860	956.3		- 8 645.4

1 Unaudited. The external auditors only audit the annual financial statements.

1. Includes, as atend-March 2020, cash received from repo transactions relating to the management of foreign currency investments amounting to CHF 4.0 billion (end-2019: CHF 13.3 billion). The associated liabilities are included in the balance sheet under foreign currency liabilities and result in a balance sheet expansion.
2. With these repo transactions, the SNB provides US dollar liquidity. It engages in foreign exchange swaps with the US Federal Reserve for this purpose. The amount in Swiss francs for the account of the Federal Reserve is stated on the liabilities side under other term liabilities.

• The SNBCOVID-19 refinancing facility (CRF) for banks based in Switzerland and the Principality of Liechtenstein. The CRF allows banks to obtain liquidity from the SNB, which is secured by federally guaranteed loans or other collateral deemed eligible.

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				Zurich, 23 April 2020
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Liabilities
In CHF millions
	31.03.2020		31.12.2019			Change
Banknotes in circulation	83	224.4	84	450.1			- 1 225.7
Sight deposits of domestic banks	526	069.8	505	810.6			+ 20 259.2
Liabilities towards the Confederation	24	143.0	23	481.5			+ 661.5
Sight deposits of foreign banks and institutions	41	160.7	30	164.1			+ 10 996.6
Other sight liabilities	34	283.5	31	997.4			+ 2 286.1
Liabilities from Swiss franc repo transactions		-			-	-
SNB debt certificates		-			-	-
Other term liabilities	5	898.6			-	+ 5 898.6
Foreign currency liabilities	4	046.6	13	314.7			- 9 268.1
Counterpart of SDRs allocated by the IMF	4	332.3	4	417.9			- 85.6
Other liabilities		294.5			237.5			+ 57.0
Equity
Provisions for currency reserves1, 2	73	216.3	73	216.3			-
Share capital		25.0			25.0			-
Distribution reserve1, 3	44	989.5	44	989.5			-
Annual result 2019	48	851.7	48	851.7			-
Interim result	- 38 225.1						- 38 225.1
Total equity	128	857.4	167	082.5			- 38 225.1
Total liabilities	852	310.9	860	956.3			- 8 645.4

1 Before appropriation of profit (cf. Annual Report 2019, p. 166).

• The allocation to the provisions for currency reserves forms part of the profit appropriation, which is performed after the General
  Meeting of Shareholders on 24 April 2020. For 2019, it amounts to CHF 5.9 billion.

• The distribution reserve only changes once a year, as part of the profit appropriation. After the profit appropriation for 2019, it will amount to CHF 84.0 billion.

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Condensed changes in equity
In CHF millions
	Q1 2020			Q1 2019
Equity at beginning of period1	167 082.5			120	232.3
Distribution of dividends to shareholders2	-		-
Profit distribution to Confederation and cantons2	-		-
Interim result	- 38 225.1	30	704.1
Equity at end of period	128 857.4			150	936.4

1 At the beginning of the period, equity is composed of share capital, provisions for currency reserves, the distribution reserve and the annual result.

2 Dividend and profit distribution take place in the second quarter.

Valuation rates

			Year under review					Previous year
	31.03.2020		31.12.2019		Change	31.03.2019		31.12.2018		Change
	CHF		CHF		In percent	CHF		CHF		In percent
1 EUR	1.0571	1.0848		- 2.6	1.1178	1.1283		- 0.9
1 USD	0.9649	0.9668		- 0.2	0.9957	0.9868		+ 0.9
100 JPY	0.8913	0.8900		+ 0.1	0.8983	0.8969		+ 0.2
1 GBP	1.1971	1.2776		- 6.3	1.2944	1.2630		+ 2.5
1 CAD	0.6735	0.7436		- 9.4	0.7453	0.7232		+ 3.1
1 kilogram
of gold	49 922.87	47 221.54		+ 5.7	41 459.06	40 612.43		+ 2.1

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Appendix

Accounting and valuation principles

The SNB is a special-statutejoint-stock company with head offices in Berne and Zurich. These interim results have been drawn up in accordance with the provisions of the NBA and the Swiss Code of Obligations (CO) as well as the accounting principles detailed in the notes to the annual financial statements as at 31 December 2019. These results present a true and fair view of the financial position and the results of operations of the SNB. Unless otherwise stated, the accounting principles are based on the Swiss GAAP FER standards (Accounting and Reporting Recommendations). Departures from Swiss GAAP FER occur only if an accounting principle runs counter to the provisions of the NBA or if the special nature of the SNB needs to be taken into account. In a departure from Swiss GAAP FER, no cash flow statement has been prepared. The structure and designation of the items in the balance sheet and the income statement take into consideration the special character of the business conducted at a central bank.

There were no changes to the accounting and valuation principles of the existing items in the annual financial statements as at 31 December 2019. Following the introduction of the temporary SNB COVID-19 refinancing facility, these items were supplemented by the new balance sheet item secured loans. The facility allows banks to obtain liquidity from the SNB, which is secured by federally guaranteed loans or other collateral deemed eligible. The claims are stated at nominal value. The interest income is stated under net result from Swiss franc positions.

Furthermore, the SNB is participating in the coordinated central bank action to further enhance the provision of dollar liquidity via the existing US dollar swap agreements. The SNB uses repo transactions to provide US dollar liquidity. These transactions are stated under the balance sheet items claims from US dollar repo transactions and other term liabilities.

The SNB interim results as at 31 March 2020 constitute an interim report in accordance with Swiss GAAP FER 31, with condensations in presentation and disclosures.

Swiss GAAP FER 31 requires the presentation of earnings per share. This has no informative value in view of the special statutory provisions for the SNB. Shareholders' rights are determined by the NBA. Their dividends, in particular, may not exceed 6% of share capital (with a nominal value of CHF 250 per share, a maximum of CHF 15); the Confederation

is entitled to one-third and the cantons to two-thirds of the remaining distributable profit. Therefore, no presentation of earnings per share is made.

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Notes to the balance sheet and income statement

Item no. 1: Net result from foreign currency positions

Breakdown by origin in CHF millions

	Q1 2020		Q1 2019		Change
Foreign currency investments	- 41 172.1	29	313.2		- 70 485.3
Reserve position in the IMF	- 24.4			18.1		- 42.5
International payment instruments	0.9			- 0.8		+ 1.7
Monetary assistance loans	- 3.5			4.8		- 8.3
Total	- 41 199.1	29	335.4		- 70 534.5
Breakdown by type in CHF millions
	Q1 2020		Q1 2019		Change
Interest income	2 070.7	2	395.5		- 324.8
Price gain/loss on interest-bearing paper
and instruments	5 098.5	6	893.0		- 1 794.5
Interest expenses	- 11.2			- 35.7		+ 24.5
Dividend income	727.5			746.7		- 19.2
Price gain/loss on equity securities
and instruments	- 31 949.6	17	436.5		- 49 386.1
Exchange rate gain/loss	- 17 125.0	1	910.7		- 19 035.7
Asset management, safe custody
and other fees	- 10.1			- 11.3		+ 1.2
Total	- 41 199.1	29	335.4		- 70 534.5

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Item no. 2: Net result from Swiss franc positions
Breakdown by origin in CHF millions
	Q1 2020		Q1 2019			Change
Negative interest on sight deposit account balances	346.0	512.7			- 166.7
Swiss franc securities	- 78.3	74.4			- 152.7
Liquidity-providing Swiss franc
repo transactions	- 0.4		-	- 0.4
Liquidity-absorbing Swiss franc
repo transactions	-		-	-
Liabilities towards the Confederation	-		-	-
SNB debt certificates	-		-	-
Other Swiss franc positions	- 0.2		- 0.5	+ 0.3
Total	267.1	586.6			- 319.5
Breakdown by type in CHF millions
	Q1 2020		Q1 2019			Change
Negative interest on sight deposit account balances	346.0	512.7			- 166.7
Interest income	9.9	11.8			- 1.9
Price gain/loss on interest-bearing paper
and instruments	- 86.9	64.4			- 151.3
Interest expenses	- 0.2		- 0.5	+ 0.3
Trading, safe custody and other fees	- 1.8		- 1.8	-
Total	267.1	586.6			- 319.5

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