by George Dorgan
My articles My siteAbout meMy booksMy videos
Follow on:TwitterFacebookGoogle +
CFA SocietySeeking Alpha
The increasing volatility of SNB Earnings Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings. But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse. Good years of the Credit Cycle This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now. Franc will rise again with crisis or inflation With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again. And this at an exchange rate that is not digestible for the SNB. We considered that after an inflationary
Topics:
George Dorgan considers the following as important: 1) SNB and CHF, Featured, newsletter, SNB balance sheet, SNB equity holdings, SNB Gold Holdings, SNB Press Releases, SNB profit, SNB results, SNB sight deposits, Swiss National Bank
This could be interesting, too:
Dirk Niepelt writes “Report by the Parliamentary Investigation Committee on the Conduct of the Authorities in the Context of the Emergency Takeover of Credit Suisse”
Nachrichten Ticker - www.finanzen.ch writes Krypto-Ausblick 2025: Stehen Bitcoin, Ethereum & Co. vor einem Boom oder Einbruch?
Connor O'Keeffe writes The Establishment’s “Principles” Are Fake
Per Bylund writes Bitcoiners’ Guide to Austrian Economics
The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary period the
- EUR/CHF will fall to 0.90
- and USD/CHF to 0.75.
And this will lead to a massive SNB loss around 150 billion CHF.
Some extracts from the official statement.
|
Income Statement, Q1 2018 Source: snb.ch - Click to enlarge |
||||||||||||||||||||||||||||||||||||
Loss on foreign currency positions
|
SNB Profit on Foreign Currencies, Q1 2018 Source: snb.ch - Click to enlarge |
||||||||||||||||||||||||||||||||||||
Valuation loss on gold holdings
Percentage of gold to balance sheetThe percentage of gold compared to the total balance sheet is falling.
Balance Sheet The balance sheet has fallen by over 22 bn. francs by 2.61%
|
SNB Balance Sheet for Gold Holdings for Q1 2018 Source: snb.ch - Click to enlarge |
||||||||||||||||||||||||||||||||||||
Profit on Swiss franc positionsThe SNB maintains its profitability, last but not least, thanks to the reduction of the profitability of banks. When too many funds arrive on their accounts, they must deposit them on their sight deposit account at the SNB.
Negative Interest ratesFurthermore, the SNB harms the Swiss economy, when it reduces the profits of Swiss banks by negative interest rates. But with this measure she maintains her own profitability.
|
SNB Result for Swiss Franc Positions for Q1 2018 Source: snb.ch - Click to enlarge |
||||||||||||||||||||||||||||||||||||
SNB LiabilitiesElectronic Money Printing: Sight Deposits Sight deposits is the biggest part of SNB interventions.
Paper Printing Banknotes in circulation: -1.9 bn francs to 76 bn. CHF
Provisions for currency reserves
|
SNB Liabilities and Sight Deposits for Q1 2018 Source: snb.ch - Click to enlarge |
Provisions for Currency Reserves are insufficient
Obviously the provisions for losses of
- 5 billion per year
are insufficient to cover the 150 billion CHF loss with the next crisis.
Tags: Featured,newsletter,SNB balance sheet,SNB equity holdings,SNB Gold Holdings,SNB profit,SNB results,SNB sight deposits,Swiss National Bank