The Raiffeisen Group closed the first half of the year with a profit of 641.6 million Swiss francs, marking the second-best half-year result in the bank group's history, according to figures released on Wednesday. However, compared to the exceptionally strong performance in the same period last year, the profit is down by 8.4 percent, which was in line with the bank's expectations.

Heinz Huber, CEO of Raiffeisen Switzerland, stated, «Raiffeisen is posting broad-based growth in all business areas for the first half of 2024. In particular, we were able to further expand our pension and investment business as well as our corporate clients business.»

Heinz Huber (Image: provided)

Mortgage Loans Increased by 1.8 Percent

Raiffeisen, long known for its strength in the mortgage sector, also saw growth in this area. With a market share of 17.9 percent, the banking group slightly expanded its market position in the first half of the year. This growth is attributed to the increase in mortgage loans, which rose by 1.8 percent to 214.8 billion Swiss francs, an increase of 3.8 billion Swiss francs.

Customer loans also grew, reaching 12.2 billion Swiss francs, a rise of 5.5 percent. The total increase in customer lending across private and corporate banking amounted to 4.5 billion Swiss francs, with approximately 1.4 billion Swiss francs coming from the corporate banking sector. Raiffeisen likely benefited from the collapse of Credit Suisse in this area.

Corporate Banking Becomes Increasingly Important

Corporate banking now accounts for around one-fifth of the group's total revenue. According to Raiffeisen, growth is particularly strong among medium and large companies, both in deposits and loans.

Customer deposits increased by 2.6 billion Swiss francs (+1.2 percent) in the first half of the year, reaching a total of 210.4 billion Swiss francs. This growth, according to the report, extends across all regions in Switzerland.

Strong Demand for Wealth Management Mandates

In the pension and investment sector, net new money inflows into securities accounts amounted to 1.9 billion Swiss francs. Around 19,000 new accounts were opened in the first six months of the year, with strong demand for wealth management mandates (+14.7 percent). Pension accounts (+6.0 percent) and fund savings plan accounts (+4.3 percent) also showed positive development. The total volume of accounts increased by 4.7 billion to 50.3 billion Swiss francs.

Further Increase in Commission and Service Business

Income from the commission and service business rose by 24.7 million Swiss francs (+7.9 percent) to 335.6 million Swiss francs, continuing the upward trend of recent years, according to Raiffeisen.

Trading income, however, decreased by 7.7 million Swiss francs (-5.8 percent) to 125.3 million Swiss francs due to market conditions in the first half of the year.

Increased Savings Interest Rates Impact Interest Income

In the interest business, Raiffeisen saw reduced gains due to last year's interest rate cuts and the decision to raise savings interest rates. As a result, net interest income fell by 6.9 percent to 1.4 billion Swiss francs, 105.9 million Swiss francs below last year's high result.

Higher Costs

Like many other banks, Raiffeisen reported higher costs, which rose by 4.5 percent compared to the same period last year. This increase was mainly driven by a higher demand for personnel in customer service, according to the report. This impacted the cost-income ratio, which now stands at 55.3 percent, compared to 51.9 percent at the end of last year.

The cooperative capital increased by 182.8 million Swiss francs compared to the end of last year, and Raiffeisen successfully placed another bail-in bond worth 150 million Swiss francs.

Overall, Raiffeisen continues to expect solid business development and a good result, though it is not anticipated to reach last year's extraordinary levels.