Raiffeisen, the third-largest banking group in Switzerland, saw its gross profit rise by 4.2 per cent to SFr992.1 million ($1.1 billion) in 2011.
The group, which consists of 328 cooperatively structured Raiffeisen banks, said on Friday that mortgage lending went up 7.5 per cent to SFr128.5 billion, while savings and investment deposits increased by 6 per cent.
However, net profit declined from SFr672 million to SFr595 million, largely because of a SFr56.5 million depreciation of its stake in Bank Vontobel that provides investment products for Raiffeisen’s asset management business.
Raiffeisen has been in the news in recent weeks after taking over much of Wegelin bank’s business and for controversial comments by its chief executive Pierin Vincenz, who called for Switzerland to bow to international demands for an automatic exchange of tax information – the first major Swiss banker to do so. Switzerland is resisting such a move, which would undermine banking secrecy laws.
On Friday, the bank sought to dampen fears that standards in mortgage lending are being relaxed in Switzerland, helping to boost house prices that have been heating up in some areas. The Swiss government recently proposed measures to reign back lending at a time of extraordinarily low interest rates.
“Due to conservative lending practices, broad regional diversification, and strict requirements for the ability of borrowers to keep up payments, the risk exposure of Raiffeisen's credit portfolio remains low,” Raiffeisen said in its statement. “Losses in the lending business are thus low, amounting to a mere SFr21.2 million or 0.016 per cent of loans to clients.”
In January, Raiffeisen announced that it would buy up the wealth management business of bank Wegelin, renaming its new venture as Notenstein Private Bank. Switzerland’s oldest private bank sold out to the cooperative after folding under the pressure of the ongoing US tax probe.
The group had previously been linked with the private bank Sarasin, that was eventually sold to Brazilian-based Safra group last November.
Raiffeisen indicated on Friday that it intends to continue its strategy of growth in future. “Raiffeisen plans to maintain the growth strategy for its core business in the current year. To assure its continued success, it plans to invest further in its network of urban bank branches and invest in succession services for corporate clients,” it said in a statement.
The group attracted 79,000 new clients last year and saw deposits rise 4.9 per cent to SFr122 billion. Most of the new business came in the form of savings and investments deposits, which rose 6.9 per cent to SFr6 billion.
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