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The core business of Swiss private banks is stagnating - where do the individual institutions stand in terms of profitability, growth and value creation?
With a comprehensive view of funding and its proactive management, companies gain response time, ability to act and room for maneuver in negotiations.
Key Takeways
In 2025, the financing environment for corporate clients is still heavily influenced by the fact that the Swiss business of Credit Suisse has been absorbed by UBS. In addition, many banks have almost reached the limits of their lending capacity compared to equity. An expansion of the credit supply and thus an intensification of competition from foreign banks, private debt or financing platforms has not yet had a significant impact. These facts have led to the expected tightening of financing options for corporate clients in Switzerland, across all industries. Credit margins have risen in line with the high demand for funding. This trend is likely to continue, if not intensify, due to the high level of investment pending in the “real” economy, f.e. in relation to energy transition and digitalization. The (expected) reduction in base interest rates (SARON, SWAP) can only partially alleviate the increasing financial burden on companies. These developments pose major challenges for corporate clients in their (re)financing.
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Despite NNM growth and an increasing Return on Assets, small private banks were only able to slightly increase their income from commission and service business on average compared to the previous year, while large private banks had to accept an average decline in their core business. In this context, it is clear that the Swiss private banks will have to ensure a return on the investments they have made in additional client advisors in the coming years in order to maintain or increase their profitability in the long term (NNM growth at appropriate margins).
The takeover of Credit Suisse has shaken confidence in the Swiss banking sector, giving Swiss private banks the opportunity to position themselves as an attractive alternative to the new big bank. In view of UBS's market power, however, this must be seen not just as an opportunity but as a must: If the Swiss private banks do not succeed in positioning themselves in a targeted manner vis-à-vis UBS, there is a risk of additional margin pressure and a decline in core business due to UBS's economies of scale.
The results of Swiss private banks in 2023 were positively influenced by an exceptionally successful interest business. This led to a strong improvement in the cost/income ratio, particularly for small institutions. This extraordinary result must not overshadow the fact that the core business is stagnating or even declining. Profitable growth in the core business should therefore be the focus of strategic considerations in order to maintain or increase profitability at the overall bank level in the long term.
Due to the increasing demands in the areas of digitalization (in particular, customer expectations regarding digital services and cyber security) and regulation, it is to be expected that the cost pressure on Swiss private banks will continue to intensify. In addition, the hiring of new client advisors has led to a significant increase in personnel expenses. Accordingly, cost efficiency must be given greater consideration in order to ensure the long-term profitability of the bank as a whole.
For detailed insights from thestudy and benchmarks, contact: Christian Hirzel and Noel Sager.
(The document is available in German only.)
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Also of interest to you, our article on Value-based Management.
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