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Swiss retail banks are once again reporting high profits – but falling interest rates, rising costs, and tougher financing conditions pose major challenges
In this year's IFBC Sector Report - Swiss Retailbanking, we once again provide you with our latest assessments of the financial performance and value-creation of Swiss retail banks. In addition, the share prices and valuations of listed Swiss retail banks are analyzed. The published annual financial statements of 55 retail banks provide a comprehensive data basis. We trust you will gain interesting insights and look forward to being available to you for a dialog.
Christian Hirzel, Partner Financial Services at IFBC: “The market does not consider the above-average profits of the past two years to be sustainable.”
Noel Sager, Director Financial Services at IFBC: “Only a few large retail banks were able to generate a return above their cost of equity in 2024, both in the short and long term.”
Artificial intelligence has the potential to deliver significant cost savings, which is why it is important to examine its use in a targeted manner and to press ahead with it where appropriate. Effective management of operational risks, particularly in the areas of cyber security and data protection, is essential for successful implementation. In addition, internal structures and processes must be designed in such a way that regulatory requirements are complied with at all times.
The increasing removal of proportional, size-specific regulatory requirements could pose significant challenges, particularly for smaller banks. In order to prepare for future tightening, it is important to use the extraordinary profits of the past two years in a targeted manner to strengthen the capital base.
The decline in interest rates is once again posing challenges for Swiss retail banks' interest margin business. While low margins were previously offset by volume growth, the difficulty of accessing capital market financing raises questions about whether this strategy will continue to be successful in the future. A stronger focus on customer deposits as a stable source of financing creates room for maneuver in this regard. It is also important to reflect the more difficult financing conditions appropriately in the pricing of loans.
IFBC Sector Report - Swiss Retailbanking
(The document is available in German only.)
IFBC supports its clients from the banking sector in designing and implementing financial bank management in a targeted manner. For detailed findings from the study, please contact: Christian Hirzel and Noel Sager.
More information about Financial Services.
Also of interest to you, our article on best practice in financial bank management at swiss banks.
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