UPDATE 2-Swiss National Bank posts record $64 bln profit in first quarter

The result for the central bank compared with a profit of 26.9 billion francs a year earlier and beat forecasts from economists at UBS, who had expected a profit of 40 billion to 50 billion Swiss francs.

It also far exceeded the SNB’s previous highest quarterly profit of 38.9 billion francs from the second quarter of 2020.

During the quarter, the SNB made a profit of 52.4 billion from its foreign currency positions, helped by rising global stock markets at the start of the year, with the MSCI World Price Index up 10% in the first quarter.

The central bank owns roughly 170 billion francs worth of stocks, including stakes in Google owner Alphabet, Apple and Starbucks as part of its massive pile of foreign currency investments.

The weakening franc, which lost around 5% against the euro and 7.5% against the dollar in the first quarter, also boosted the franc value of the SNB’s foreign holdings. Overall exchange rate-related gains came to 38 billion francs.

The SNB made a valuation gain of 8.9 billion francs from its gold holdings, as prices of the precious metal surged 15% during the quarter amid concerns about tensions in the Middle East.

The profits were dampened by a loss of 2.4 billion francs on the SNB’s franc positions, mainly from the interest paid on the sight deposit accounts it holds for commercial banks.

“This was a very strong quarter for the SNB, with equities markets doing very well, but the biggest driver was the weakening of the Swiss franc,” said UBS economist Alessandro Bee.

Bee cautioned the results should not be seen as an indicator for large profits in the coming quarters.

“With such benign markets you don’t normally see a rise in the value of gold, while the dollar will probably weaken during the year, so the SNB won’t get the currency gain in the future,” he said.

This article was generated from an automated news agency feed without modifications to text.