Swiss National Bank Publishes Annual Results For 2007

By Ulrika Lomas, for LawAndTax-News.com, Brussels

29 January 2008

The 2007 accounts of the Swiss National Bank show an annual result of CHF8.0 billion, as compared with CHF5.0 billion in 2006.

According to the SNB, the high level of profit is due to the fact that the price of gold rose again last year. Since 2005, the price of gold has increased substantially, and it rose particularly steeply in the final quarter of 2007.

Net income from gold holdings came to CHF6.4b (CHF4.2 billion in 2006). Foreign currency investments, most of them in fixed-income securities, contributed a total of CHF1.3b (CHF0.8 billion) to the favourable result, the annual report revealed.

Of these, interest-bearing securities earned CHF2.0 billion and shares CHF0.1 billion. Exchange rate developments, mainly arising from the weak US dollar, diminished the result by an amount of CHF -0.7 billion (CHF -0.5 billion in 2006).

Together with other income and expenses, the annual result came to CHF8.0 billion, compared with CHF5.0b a year previously.

In June 2007, the SNB announced that it would be reducing its gold holdings by 250 tonnes by the end of September 2009. At the end of 2007, 145 tonnes of gold had been sold, and the proceeds transformed into foreign currency investments.

As at the end of December, gold holdings amounted to 1,145 tonnes.

As the SNB’s results fluctuate very sharply due to market trends, the profit distributions have been fixed in advance in an agreement between the Confederation and the National Bank, in order to smooth the payments in the medium term.

The agreement, concluded in 2002, foresees a further distribution of CHF2.5 billion. From the 2007 annual result, CHF751 million is allocated to the provisions for currency reserves, as prescribed by law.

The distributable profit remaining after this allocation amounts to CHF7.2 billion, of which CHF2.5 billion is set aside for distribution to the Confederation and the cantons in 2007, while a legally stipulated maximum dividend of 6% is earmarked for the shareholders.

The remaining CHF4.7 billion is allocated to the distribution reserve, bringing it to CHF22.8 billion (CHF18.1billion).

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