Strong franc leaves Swiss central bank with record first-half loss

In its interim earnings release, the central bank detailed the full extent of its balance sheet pain, as unlike most of its major counterparts, the SNB is privately run and has shareholders to report to like a regular company.

Switzerland shocked markets in January when it abandoned its four-year currency peg to the euro.

The Swiss franc rose to a one-week high against the euro and jumped 0.8 percent against the dollar on Friday, after the Swiss National Bank unveiled record losses that raised questions about how long it can keep intervene to keep franc strength in check.

The central bank warned it might not be able to share any profits with the nation’s government this year if results did not improve in the second half of 2015. Today, the bank reported a whopping 50-billion-franc loss for the first half of 2015 (pdf), the largest such deficit in its history.

The SNB also took a big loss on gold, which has steadily declined in price this year.

The central bank however made some money from interest income, which reached 3.5 billion francs, as well as from dividends amounting to 1.2 billion francs.

Second, the depreciation of the euro against the franc led to significant currency losses on the SNB’s $550 billion foreign-exchange reserves, of which some $230 billion is held in the single currency.

It pointed to strong fluctuations in its financial results depending largely on developments in the gold, foreign exchange and capital markets.

“Only provisional conclusions are possible as regards the annual result”, added the bank.