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ZURICH, Oct 30 (Reuters) - The Swiss National Bank reported on Friday a third-quarter profit of 14.3 billion Swiss francs ($15.77 billion) on gains the central bank made from its massive holdings of foreign currency investments.
The SNB made a profit of 12.04 billion francs from its foreign currency positions, which include shares and bonds it bought with Swiss francs to weaken the safe-haven franc currency.
The bank also made a profit of 2 billion francs from the increased value of its gold holdings during the quarter, as the price of the precious metal rose.
The SNB made a quarterly profit of 355 million francs from its Swiss franc positions, mainly the negative interest rates it charges commercial banks. Negative rates are one of its tools it uses to check the appreciation of the franc.
“The SNB has had a relatively quiet third quarter where it was able to benefit from the gains in equity markets around the world,” said UBS economist Alessandro Bee.
“With the SNB owning around 170 billion francs in foreign stocks, I estimate around two-thirds of their quarterly profit came from increased valuations,” said Bee.
For the first nine months, the SNB posted a profit of 15.1 billion francs, increasing the likelihood of the central bank’s making the maximum payout of 4 billion francs to the Swiss government and cantons.
Though making a profit is not part of the SNB’s mandate, Switzerland’s federal and regional governments appreciate the payout it makes, especially with coronavirus support measures expected to push the national budget into a rare deficit in 2020.
$1 = 0.9070 Swiss francs Reporting by John Revill; Editing by Michael Shields