Players in the Geneva financial center saw their sector strengthen in the first half of 2024. Lucid in the face of regulations, taxation and global uncertainties, they nevertheless remain confident for 2025, driven by expected increased results.
Over the first six months, the net profit of banks, wealth managers and other financial intermediaries increased overall, the economic survey conducted by the Geneva Financial Center Foundation (FGPF) indicated on Thursday.
Although 31.3% of banks with more than 200 employees recorded a decline of 15% or less in net profit, this is an exception. Other banks with between 50 and 200 employees, those with fewer than 50 jobs or even wealth managers and financial intermediaries all recorded an increase in net profit, on average between +3% and +7%.
With 8,400 companies at the end of September, the financial sector represents 12.9% of Geneva’s gross domestic product (GDP). Its contribution to cantonal GDP in real added value represents nearly 8 billion francs, underlines the study.
The wealth management sector was notably driven by the increase in assets under management with an increase in net new money inflows. The Geneva market remains particularly attractive for customers from Europe, Latin America and the Middle East, underlines the study.
“The first half of 2024 remains a good vintage even if it is difficult to return to the record level of 2023,” underlines Edouard Cuendet, director of the foundation, to the press.
“The banking sector plays its role as an economic engine and still has a good reputation. The players remain confident and lucid,” adds Denis Pittet, president of the foundation. “Today, the three issues are market access, regulation and taxation. We therefore remain vigilant in the face of the development of framework conditions.”
Attractive framework conditions
The framework conditions offered in the Geneva financial center continue to attract international players, according to the FGPF. Over the year 2023 as a whole, appeal has particularly increased from European, Latin American and Middle Eastern customers. Depending on the activities, interest has generally been growing with regard to wealth management and alternative products, for example.
In the areas to be prioritized at the Geneva level, the establishments respond by mutual agreement to the taxation of individuals, followed by infrastructure and security. At the federal level, regulation is the priority, according to them.
When asked about the possibility of transferring basic activities outside of Geneva, the stakeholders interviewed mainly chose Luxembourg, Dubai, London and “others”. Places like Singapore, Dublin or even New York were chosen very little or not at all.
Concerning the repercussions of the sanctions taken against Russia, linked to the war in Ukraine, on business operations, they are “weak” for all financial and banking players. “Geopolitical developments have accelerated and become highly complex. As the industry is internationally oriented, this has an important dimension in decision-making,” warns Mr. Pittet.
Favorable employment trend
The FGPF lists a total of 38,114 jobs at the end of September. For banks alone, the number of jobs amounts to 17,639. Nearly 46% (8,098 jobs) are found in the 21 listed stock exchange banks, and 38.8% (6,836 jobs) in the 46 foreign-owned banks.
Wealth managers and other financial intermediaries represent 22.5% of total jobs, or 8,588 positions. Next come trustees and accountants at 14.2% (5,401 jobs), lawyers and notaries at 9.9% (3,788) and finally insurance at 7.1% (2,698), underlines the FGPF.
In a ten-year comparison, the increase in jobs increased from 37,451 in 2014 to 38,114 in 2024. On the other hand, banks saw the number of establishments decline from 121 to 80 establishments, and jobs from 19,415 to 17,639.
Considering organic business growth, 47.1% of large banks, 61.1% of medium-sized banks and 50.0% of small-sized banks plan to strengthen their workforce. Asset managers and other financial intermediaries are aiming for an unchanged number of jobs at 59.0% and 25.3% intend to increase it.
For 2024, 23.5% of large banks expect an increase of 3% to 7% in their net profit, and even 17.6% of them between 8% and 14% more. Same trend for those of medium and small sizes. Wealth managers and other financial intermediaries are even more confident, with 5% aiming for an increase of 15% or more. More than 41% of banks with the largest staff speak of a “difficult” year while 43.2% of wealth managers and other intermediaries judge it to be “good”, reports the FGPG.
For 2025, Geneva stakeholders are talking about stability. The net profit should be positioned in balance (from -2% to +2%) for a large majority. Only banks with fewer than 50 jobs are counting on an increase of 3% to 7%. All players intend to increase their workforce.
This article was automatically published. Sources: ats/awp
