On Monday, the Swiss National Bank (SNB) reported an annual loss of 3.2 billion Swiss Francs ($3.62 billion) for last year as the move to positive interest rates meant it was unable to pay a dividend for the second consecutive year.

The SNB is the latest central bank to report losses due to increased interest rates aimed at combating inflation, leading to billions in payments to commercial lenders.

Last month, the German central bank reported a loss of €21.6 billion in 2023, wiping out almost all of its provisions, whilst the Dutch central bank lost €3.5 billion, Reuters news agency reports.

The Swiss National Bank's gains made on gold holdings as well as interest paid on emergency loans granted during the Credit Suisse rescue, were insufficient to offset the cost of the central bank's tighter monetary policy.

In 2022 the SNB exited negative interest rates, and has paid 1.75% interest to commercial banks since last June which hold money with it overnight.

Monday's data revealed that although sight deposits have fallen in recent months, the figure remained at 478.5 billion Francs.

Furthermore, the central bank's profits were also impacted by a stronger Swiss Franc in 2023, following on from elevated interest rates and lower inflation in Switzerland.

Indeed, profits from the SNB's close to 700 billion Francs worth of foreign bonds and stocks declined to 4 billion Francs as dividend, interest and valuation gains were affected by 58 billion Francs in exchange-rate related losses.

The outcome of 2023, aligning with the SNB's initial forecast in January, represented an improvement compared to the unprecedented loss of 132.5 billion Francs in 2022. 

However, it fell short of enabling any dividend payouts to shareholders or the Swiss central and regional governments for the second straight year. 

This marks only the third instance in the past 32 years where the SNB has not paid a dividend.