Banks in Switzerland, 2009 edition
17.06.2010, In 2009, banks faced three significant trends. While the effects of the financial crisis continued to be felt, at the same time stock market prices increased and interest rates remained low.
Although the crisis continued to affect banks with a foreign business focus, in particular, business in the industry as a whole was assisted by the recovery of both financial markets and stock market prices. The overall figure for bank profits increased again. Following the heavy losses in 2008, the total figure for losses was substantially lower in 2009, although there was a slight increase in the number of banks recording a loss. A continued reduction in balance sheet items relating to foreign business led to another decline in the aggregated balance sheet total in 2009.
The low interest rates affected both assets and liabilities. Mortgage lending again increased significantly and there were reallocations within customer deposits. The 2009 edition of Banks in Switzerland is based on data on banks’ (parent companies) individual financial statements, as required by law. For the income statement, the data presented may deviate from consolidated figures, particularly in the case of the big banks.
Income statement
Of the 325 banks covered, 276 reported a profit (284 in 2008) and 49 a loss (43 in 2008). Compared to 2008, total annual profit for all the banks rose by 2.9% to CHF 8.7 billion. Profits were recorded by the following bank categories with a domestic business focus – cantonal banks, regional and saving banks, and Raiffeisen banks. By contrast, bank categories with a foreign business focus recorded losses, i.e. stock exchange banks, foreign-controlled banks and branches of foreign banks, and one big bank. The cumulative annual losses amounted to CHF 6.3 billion, compared to CHF 38.9 billion in 2008. Profit from ordinary banking operations increased by 47.5% to CHF 12.7 billion due, in particular, to the positive result from trading operations which amounted to CHF 3.5 billion.
In 2008, this result was heavily affected by the big banks’ losses and, at CHF –8.1 billion, was negative. In 2009, net interest income fell by 9.2% to CHF 19.4 billion. This was due, in particular, to the decline in interest and dividend income on securities portfolios, which tumbled by more than half to CHF 6.5 billion. Net income from commission business and services fell by 13.9% to CHF 25.8 billion. While wages and salaries increased (+4.2%) in 2009, staff numbers were down by 4.4%.
Balance sheet business
In 2009, the aggregate balance sheet total for all banks in Switzerland again fell sharply, dropping by 13.4% to CHF 2,668.2 billion. The decrease is attributable to lower claims against and liabilities towards entities abroad. Domestic mortgage claims rose by 5.2% to CHF 724.8 billion, mainly because of the exceptionally low level of mortgage rates, particularly for fixed-rate mortgages. While fixed-rate mortgages were up by 23.0%, or CHF 104.5 billion, to CHF 559.0 billion, variable-rate mortgages declined by 29.4%, or CHF 68.9 billion, to CHF 165.8 billion. Claims against domestic customers fell by 2.1% to CHF 178.0 billion, while those against foreign customers were down by 7.8% to CHF 370.3 billion.
Trading portfolios and financial investments were up by 7.2% to CHF 336.6 billion. Participating interests declined by 9.1% to CHF 43.7 billion. Claims against banks tumbled by 27.6% to CHF 595.2 billion, which was an even bigger drop than had been recorded in 2008 (–18.9%). The big banks, in particular, reported substantially lower foreign balance sheet items. Liquid funds decreased by 27.2% to CHF 93.2 billion. While sight deposits at the SNB rose slightly, sight deposits at foreign central banks decreased substantially.
In 2009, customers made substantial reallocations of deposits, largely due to interest rate considerations. They invested more of their funds in savings deposits (+18.9% to CHF 426.0 billion) and sight deposits (+45.8% to CHF 556.2 billion), while again significantly reducing their holdings of time deposits (–39.8% to CHF 359.8 billion). Lower interest rates also contributed to the decline in medium-term bank-issued notes (– 11.6% to CHF 44.5 billion), which decreased particularly sharply at cantonal banks (– 14.8%) and Raiffeisen banks (–9.9%), which issue the majority of these instruments.
Securities held in custody accounts
Following a substantial decline in customer holdings of securities in bank custody accounts in 2008, these holdings rose again in the year under review by 12.4% to CHF 4,508.2 billion. This was largely attributable to the rise in stock market prices. Investments in shares recorded the biggest increase, by 25.2% to CHF 1,527.7 billion; in 2008, this category had suffered the greatest decline. Units in collective investment schemes also advanced (+9.2% to CHF 1,309.4 billion), as did bonds (+11.8% auf CHF 1,299.4 billion).
Resident custody account holders held 44.9% of securities (44.1% in 2008), while nonresident account holders held 55.1% (55.9%). The holdings of resident custody account holders were up by 14.2%, with institutional customers, in particular, recording a substantial increase (by 16.5% to CHF 1251.8 billion), as did private customers (by 13.9% to CHF 519.0 billion). In the case of non-resident custody account holders, a double- digit percentage rise was recorded in the holdings of both institutional customers (by 14.6% to CHF 1562.5 billion) and commercial customers (by 15.0% to CHF 180.6 billion). The holdings of non-resident private customers only grew by 3.0% to CHF 742.5 billion.
Fiduciary business
Fiduciary funds managed by banks declined by 35.1% to CHF 248.2 billion. This reflected the response of investors to the exceptionally low rate of interest. Fiduciary funds invested in Swiss francs and US dollars were down by more than 30%, while those in euros, where relative interest rates had fallen sharply, dropped by more than 41%. With a share of 44.9%, the US dollar remained the most important investment currency. The share of fiduciary funds invested in euros, which had risen substantially in 2008, diminished from 37.7% to 34.0%, while the share of fiduciary funds in Swiss francs remained almost constant, at 7%.
Employment
In terms of full-time equivalents, staff numbers were down by 5,933 to 129,807 (–4.4%). Staff cuts occurred both in Switzerland (–2,576) and abroad (–3,335). With their staff numbers reduced by 5,558, the big banks were responsible for most of this decrease.
Contact
Schweizerische Nationalbank P.O. Box, CH-8022 Zurich Telephone 044 631 31 11 Fax 044 631 39 10 www.snb.ch
The low interest rates affected both assets and liabilities. Mortgage lending again increased significantly and there were reallocations within customer deposits. The 2009 edition of Banks in Switzerland is based on data on banks’ (parent companies) individual financial statements, as required by law. For the income statement, the data presented may deviate from consolidated figures, particularly in the case of the big banks.
Income statement
Of the 325 banks covered, 276 reported a profit (284 in 2008) and 49 a loss (43 in 2008). Compared to 2008, total annual profit for all the banks rose by 2.9% to CHF 8.7 billion. Profits were recorded by the following bank categories with a domestic business focus – cantonal banks, regional and saving banks, and Raiffeisen banks. By contrast, bank categories with a foreign business focus recorded losses, i.e. stock exchange banks, foreign-controlled banks and branches of foreign banks, and one big bank. The cumulative annual losses amounted to CHF 6.3 billion, compared to CHF 38.9 billion in 2008. Profit from ordinary banking operations increased by 47.5% to CHF 12.7 billion due, in particular, to the positive result from trading operations which amounted to CHF 3.5 billion.
In 2008, this result was heavily affected by the big banks’ losses and, at CHF –8.1 billion, was negative. In 2009, net interest income fell by 9.2% to CHF 19.4 billion. This was due, in particular, to the decline in interest and dividend income on securities portfolios, which tumbled by more than half to CHF 6.5 billion. Net income from commission business and services fell by 13.9% to CHF 25.8 billion. While wages and salaries increased (+4.2%) in 2009, staff numbers were down by 4.4%.
Balance sheet business
In 2009, the aggregate balance sheet total for all banks in Switzerland again fell sharply, dropping by 13.4% to CHF 2,668.2 billion. The decrease is attributable to lower claims against and liabilities towards entities abroad. Domestic mortgage claims rose by 5.2% to CHF 724.8 billion, mainly because of the exceptionally low level of mortgage rates, particularly for fixed-rate mortgages. While fixed-rate mortgages were up by 23.0%, or CHF 104.5 billion, to CHF 559.0 billion, variable-rate mortgages declined by 29.4%, or CHF 68.9 billion, to CHF 165.8 billion. Claims against domestic customers fell by 2.1% to CHF 178.0 billion, while those against foreign customers were down by 7.8% to CHF 370.3 billion.
Trading portfolios and financial investments were up by 7.2% to CHF 336.6 billion. Participating interests declined by 9.1% to CHF 43.7 billion. Claims against banks tumbled by 27.6% to CHF 595.2 billion, which was an even bigger drop than had been recorded in 2008 (–18.9%). The big banks, in particular, reported substantially lower foreign balance sheet items. Liquid funds decreased by 27.2% to CHF 93.2 billion. While sight deposits at the SNB rose slightly, sight deposits at foreign central banks decreased substantially.
In 2009, customers made substantial reallocations of deposits, largely due to interest rate considerations. They invested more of their funds in savings deposits (+18.9% to CHF 426.0 billion) and sight deposits (+45.8% to CHF 556.2 billion), while again significantly reducing their holdings of time deposits (–39.8% to CHF 359.8 billion). Lower interest rates also contributed to the decline in medium-term bank-issued notes (– 11.6% to CHF 44.5 billion), which decreased particularly sharply at cantonal banks (– 14.8%) and Raiffeisen banks (–9.9%), which issue the majority of these instruments.
Securities held in custody accounts
Following a substantial decline in customer holdings of securities in bank custody accounts in 2008, these holdings rose again in the year under review by 12.4% to CHF 4,508.2 billion. This was largely attributable to the rise in stock market prices. Investments in shares recorded the biggest increase, by 25.2% to CHF 1,527.7 billion; in 2008, this category had suffered the greatest decline. Units in collective investment schemes also advanced (+9.2% to CHF 1,309.4 billion), as did bonds (+11.8% auf CHF 1,299.4 billion).
Resident custody account holders held 44.9% of securities (44.1% in 2008), while nonresident account holders held 55.1% (55.9%). The holdings of resident custody account holders were up by 14.2%, with institutional customers, in particular, recording a substantial increase (by 16.5% to CHF 1251.8 billion), as did private customers (by 13.9% to CHF 519.0 billion). In the case of non-resident custody account holders, a double- digit percentage rise was recorded in the holdings of both institutional customers (by 14.6% to CHF 1562.5 billion) and commercial customers (by 15.0% to CHF 180.6 billion). The holdings of non-resident private customers only grew by 3.0% to CHF 742.5 billion.
Fiduciary business
Fiduciary funds managed by banks declined by 35.1% to CHF 248.2 billion. This reflected the response of investors to the exceptionally low rate of interest. Fiduciary funds invested in Swiss francs and US dollars were down by more than 30%, while those in euros, where relative interest rates had fallen sharply, dropped by more than 41%. With a share of 44.9%, the US dollar remained the most important investment currency. The share of fiduciary funds invested in euros, which had risen substantially in 2008, diminished from 37.7% to 34.0%, while the share of fiduciary funds in Swiss francs remained almost constant, at 7%.
Employment
In terms of full-time equivalents, staff numbers were down by 5,933 to 129,807 (–4.4%). Staff cuts occurred both in Switzerland (–2,576) and abroad (–3,335). With their staff numbers reduced by 5,558, the big banks were responsible for most of this decrease.
Contact
Schweizerische Nationalbank P.O. Box, CH-8022 Zurich Telephone 044 631 31 11 Fax 044 631 39 10 www.snb.ch
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