Consolidated profits in the Swiss banking sector reached a historic high last year at 25.9 billion francs. The capital gain made by UBS on its acquisition of Credit Suisse explains this exceptional level, the Swiss Bankers Association said on Thursday.
The consolidated operating profit of banks in Switzerland increased by 2.9% over the year, to 72.3 billion, notes the ASB banking barometer, which stresses the need to consider these figures ‘positive’ in light of the takeover of Credit Suisse by UBS.
In 2023, the Swiss banking leader posted a net profit of 29.9 billion dollars, more than tripled over a year despite the costs of integrating Credit Suisse. This performance is directly linked to an accounting gain of some 29 billion, i.e. the goodwill that UBS benefited from after the takeover of its former rival.
Despite a still favourable interest rate environment last year, domestic banks struggled in their core credit business, with interest income stagnating (-0.7%) across the sector. For the major banks, the interest expense caused by the fall of Credit Suisse weighed on performance.
The Swiss banking sector generated less commission income last year, mainly due to securities, investment and sight deposit transactions, the umbrella organisation noted. These revenues fell by 6.8% to CHF 21.8 billion. Trading operations followed an opposite trend, with their income increasing by 21.3% to CHF 10.9 billion thanks to the volatility of the financial markets.
Credit volumes also increased. The ASB recorded mortgage loans totalling CHF 1,179.2 billion, an increase of 2.3%. The cantonal banks took the lion’s share, covering 39.1% of this amount, compared to 24.9% for the major banks.
Slight increase in workforce
Switzerland remains the world leader in cross-border wealth management, as evidenced by portfolios up 4.8% (excluding currency effects) to CHF 2,205.7 billion. The cumulative assets under management of all banks established in the country increased by 6.9% to CHF 8,391.7 billion, of which CHF 3,794.4 billion came from clients domiciled abroad.
Recruitment continued last year in the banking sector, albeit at a moderate pace. The total workforce reached 93,299 full-time equivalents in Switzerland, an increase of 1,280 (+1.4%). The unemployment rate in the financial sector stood at 2.3%, the same level as that of the overall economy, the umbrella organisation states.
A survey of members revealed that staffing levels remained stable over the first six months of 2024. The status quo is also expected to prevail in the second half of the year for half of the institutions surveyed.
The umbrella organisation also unveils its updated annual forecasts for the sector. Specialists surveyed by the SBA expect a stable operating result for 2024. However, business performance should be marked by a decline in interest transactions, linked to the rate cuts decided by the Swiss National Bank. Other activities should compensate ‘all or part’ of this negative development.
Credit volumes are expected to be below the average of the last five years, particularly in the area of mortgage credit, weighed down by a decline in supply on the real estate market, regulatory inflation and the increase in construction appeals. The sector also expects increased competition in the area of corporate credit from non-bank players.
For cross-border wealth management, volumes are expected to increase by 5% over one year.
/ATS