The Lucerne Cantonal Bank (LUKB) has increased its profit and set even higher targets for 2025. In the first nine months of 2024, the cantonal bank achieved a net income of 216,0 million francs, marking a 9,1 percent increase compared to the same period last year, as shown in the third-quarter report released on Friday.

Part of this increase is attributed to the sale of the real estate division of the Fundamenta Group, which brought in an extraordinary income of 32,3 million Swiss francs. Of this amount, 25 million was allocated to reserves for general banking risks.

«We managed to cushion the impact of this year’s three interest rate cuts with active interest management,» says CEO Daniel Salzmann (pictured below).

(Image: LUKB)

Operating profit rose by 5,0 percent to 237,1 million francs, while revenue increased by 5,7 percent to 483,5 million francs.

High Demand for Corporate Loans

Net interest income rose by 4,7 percent to 328,0 million francs. As of the end of September, customer loans totaled 42,98 billion francs, an increase of 3,0 percent, with mortgage loans making up the majority at 37,47 billion francs (up 2,4 percent). «We are currently seeing high demand for corporate loans,» says the cantonal bank CEO.

Lower Trading Results

In the commission and services business, income increased by 8,5 percent to 95,8 million francs. However, trading income could not match last year’s record level, with revenue here down by 8,5 percent to 45,3 million francs.

The planned increase in personnel led to higher costs, with the number of full-time positions rising by 45,6 to a total of 1,180.5 full-time positions this year. Overall, expenses increased by 7,9 percent to 227,8 million francs. The cost-income ratio stood at 46,1 percent, clearly below the bank’s target of a maximum of 50 percent.

Net New Money and Performance

Customer assets at the end of the quarter totaled 39,47 billion francs, representing a 4,7 percent increase compared to the end of 2023. This growth is composed of acquired net new money amounting to 938 million francs and a positive performance of 845 million francs.

Management remains optimistic that annual targets will be met, with group profit expected to be «at the upper end» of the guidance range of 270 to 285 million francs. In 2023, LUKB posted a profit of 265 million francs.

Growth is expected to continue in 2025 to offset anticipated lower interest income. «In 2025, we aim to grow net new money in the mandated asset management business by over 1 billion francs, target non-interest income of at least 215 million Swiss francs, and aim for credit growth of between 2,00 percent and 3,75 percent,» says Salzmann, outlining the goals.