The Swiss National Bank (SNB) reported an annual loss of 3.2 billion Swiss francs ($3.62 billion) for 2023, attributing the setback to the shift to positive interest rates, which prevented the bank from paying dividends for a second consecutive year. This development mirrors similar losses reported by other central banks grappling with the impact of higher interest rates on their financial standings.
According to SNB’s financial report, gains from gold holdings and interest income from emergency loans extended during the Credit Suisse rescue effort were insufficient to counterbalance the costs incurred due to the central bank’s tightened monetary policy. Since exiting negative interest rates in 2022, the SNB has been paying interest of 1.75% to commercial banks for overnight deposits, a policy aimed at fostering a more stable financial environment.
Despite the challenges, Switzerland’s tighter monetary policy has yielded positive outcomes in terms of inflation management, with inflation rates remaining comparatively low. However, the SNB’s profits were further impacted by a stronger Swiss franc, which experienced appreciation in response to higher interest rates and subdued domestic inflation.
Although the reported loss represents an improvement from the record loss incurred in 2022, it remains insufficient to facilitate dividend payments to shareholders or governmental entities for the second consecutive year. While this development marks only the third instance in over three decades that the SNB has withheld dividends, it is unlikely to significantly influence future monetary policy decisions, with Chairman Thomas Jordan expected to announce the latest rate decision on March 21, despite his impending departure.