The Zürcher Kantonalbank (ZKB) recorded a pre-tax profit of CHF 1,29 billion for the 2024 financial year. This represents an increase of 3,4 percent compared to the previous year, according to a statement released on Friday.

However, at the net profit level, the OECD minimum tax, which was levied for the first time in 2024, had a noticeable impact. The tax expense multiplied to a total of CHF 168 million. In the previous year, it had only amounted to CHF 7 million.

Of this amount, CHF 156 million is attributed to the OECD minimum tax, which flows entirely to the Canton of Zurich, according to the statement.

As a result, the group's net profit after taxes fell by 9,5 percent to CHF 1,12 billion.

Lower Interest Income

Total operating income decreased by 3,3 percent year-on-year to CHF 3,09 billion. Gross interest income declined from CHF 1,87 billion to CHF 1,74 billion. Nevertheless, despite the significant interest rate cuts by the Swiss National Bank (SNB), the bank achieved a solid return from its most important revenue source, the statement continued. While interest income from lending and mortgage business, as well as volume, developed favorably, declining interest income in the liability business was the main driver of the decrease.

Net interest income fell by 7,7 percent to CHF 1,68 billion, while the mortgage portfolio grew by 5,7 percent to CHF 106,6 billion.

Positive Performance in Commission and Service Business

Earnings from the commission and service business increased by 8,9 percent to CHF 1,02 billion. Commission income from securities and investment business rose by approximately 13 percent to CHF 1,15 billion. According to the statement, this record result was mainly due to the strong growth in assets under management over the past two years, coupled with a favorable stock market environment.

However, ZKB recorded a significant 15 percent decline in trading income, which fell to CHF 353 million. This segment was unable to match the exceptionally strong performance of the previous year, as expected.

Customer Growth and Net New Money Inflow

As of year-end, total client assets amounted to CHF 520,8 billion, marking a 15,5 percent increase compared to the previous year. Net new money inflows reached CHF 29,8 billion, up from CHF 27,4 billion in the previous year.

In 2024, ZKB gained approximately 30,900 new customers, partly due to the free «ZKB Banking» offer, the statement continued.

On the cost side, operating expenses increased by 3,1 percent to CHF 1,73 billion, while the cost-income ratio stood at 55,0 percent (previous year: 51,8 percent).

Further Pressure on Interest Margins

ZKB CEO Urs Baumann expects the bank to continue generating a solid group profit in 2025 despite existing challenges. «The macroeconomic environment remains challenging. We anticipate increasing competition and growing margin pressure in the Swiss banking sector in 2025. Additionally, the interest rate level, driven by potential SNB rate cuts, could reduce expected interest income,» Baumann stated.