The Banking Barometer of the Swiss Bankers Association (SBA) shows an overall solid business performance of domestic banks last year. This was the conclusion reached by 16 chief economists, chief investment officers, and senior investment experts in the Swiss Banking Outlook survey conducted by the SBA. They represent member institutions with nearly two-thirds of the total assets of all banks in Switzerland.
Despite challenging conditions with a significant decline in securities prices and shifts of client funds in the run-up to the takeover of Credit Suisse by UBS, the banks in Switzerland achieved an almost consistently high aggregate business profit of CHF 70.3 billion.
Rising interest income of the banks
For 2023, the financial experts estimate economic growth at 0.9% and inflation at 2.4%. The outlook does not assume a further increase in the key interest rates of the Swiss National Bank (SNB) above the current level of 1.75%.
In line with the improved environment, the further forecast for 2023 speaks of an increase in business performance. The main driver is the rising interest income of the banks. In the case of mortgage loans, the higher interest rate level and the overall subdued economic development are likely to be the main factors leading to below-average growth.
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In addition to rising interest rates, digital channels also represent good future revenue opportunities for Swiss banks. Instant and complex digital data access forms a multifaceted enhancement to the customer experience. In turn, the continued promotion of Sustainable Finance is expected to lead to strong volume growth in sustainable investments in 2023.
Economic growth and declining inflation
The 235 Swiss banks were able to report higher domestic employment in 2022 for the third year in a row (+1,429 full-time equivalents). At 92,019, the number was thus above the 2017 level. Employment in the banking sector also increased slightly in the first half of 2023.
For 2024, the Swiss Banking Outlook forecast for economic growth is 1.5 percent. Inflation is expected to show a decline, from 2.4 percent this year to 1.6 percent in 2024. The development of the stock markets is also viewed positively.
