(Adds detail and comment)
By John Revill
ZURICH Jan 9 Switzerland's central bank expects
to post a profit of more than 24 billion Swiss francs ($23.57
billion) for 2016, it said on Monday, as it logged big gains
from its foreign currency holdings and its negative interest
The Swiss National Bank made a profit of 19 billion
francs on foreign currency investments which rose to roughly 645
billion francs last year, a size similar to the entire Swiss
The bank made a profit of 3.9 billion francs on the
valuation of its gold holdings. The SNB's profits are not part
of its monetary policy mandate.
The profit figure compared with a 23.3 billion franc loss
recorded by the bank for 2015 when the value of its foreign
currency investments fell sharply.
The bank has built up foreign currency reserves by selling
francs and buying foreign currency to weaken the franc, which it
has consistently described as "significantly overvalued".
A strong franc makes life more difficult for Switzerland's
exporters by making their products more expensive outside the
To quell demand for Swiss franc investments, the SNB has
also been charging a negative interest rate on cash it holds for
The SNB on Monday did not give a figure for how much it has
pocketed from the charge, but analysts estimate the figure to be
around 1.5 billion francs.
Banks have complained about the negative rates, which they
see as an extra charge on their activities, while pension funds
have also struggled with the rates, which together with the low
interest rate environment has weighed on their investments.
The Swiss federation of trade unions (SGB) has asked the SNB
to give the money collected from negative interest rates to
pension funds, a proposal supported by the association of Swiss
"The pension funds need every franc, and any kind of support
would be welcome," said Daniel Lampart, chief economist at the
SGB, saying the SNB had rejected any payment to the pension
funds which it said would require a change of law.
The SNB is not required to make a profit, with its main
mandate to ensure price stability in Switzerland. But a portion
of any profit it does make is distributed to the Swiss
government and the country's 26 cantons.
For 2016 the SNB said it expects to raise its normal payment
of 1 billion francs to 1.5 billion francs, in addition to its
dividend payment of 15 Swiss francs per share to investors.
($1 = 1.0184 Swiss francs)
(Reporting by John Revill; editing by John Miller and Jason