To gauge the pulse of the Swiss baning sector, one must consider the «Banking Barometer» and the «Swiss Banking Outlook» released by the Swiss Bankers Association on Thursday. This year, the collapse of Credit Suisse (CS) is clearly reflected in the Banking Barometer, which relies on data from the Swiss National Bank (SNB) and insights from surveys of SBA member organizations.

In 2023, the aggregate business success of Swiss banks increased by 2.9 percent to 72.3 billion francs, while net profit reached a historic high of 25.9 billion francs. However, the SBA notes that these positive results should be viewed in the context of one-time effects related to UBS's acquisition of CS.

Stagnation of Interest Income Due to Emergency Loans

The 0.7 percent decline in interest income, despite the overall success of the interest business among domestic banks, is also attributed to impact of the Credit Suisse situation. «The decrease was due to the high interest expenses incurred by major banks in the wake of CS's collapse, which adversely affected the results.» Emergency loans from the SNB, such as those received by CS, come with an interest premium over market rates.

On a positive note, Switzerland remains the global leader in cross-border private wealth management, with clients assets reaching 2,206 billion francs, an increase of 4.8 percent, solidifying its top position.

Political Stability and Solid Currency Gain Importance

Looking ahead, the Swiss Banking Outlook, based on a survey of chief economists and chief investment officers from SBA member organizations, predicts that bank performance for the current year will remain stable compared to the previous year. With declining interest rates, interest income is expected to decrease. However, this decline is anticipated to be partially offset by positive developments in commission, service, and trading income.

Experts are optimistic about cross-border wealth management, forecasting a 5% growth for 2024. This growth is attributed to Switzerland's increasing role as a safe haven with high political stability and a solid currency.

More to follow.