Swiss banks less optimistic due to lower interest rates

Swiss banks less optimistic due to lower interest rates Keystone-SDA

The fall in interest rates is putting Swiss banks under pressure, according to the new EY Banking Barometer.

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Just under half of banks expect operating results to decline in 2025, although a majority expect margins in the interest business to stabilise.

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Although banks are also likely to report solid results in 2025, these will be below the level of the past two years, according to the Banking Barometer.

Of the more than 100 banks surveyed as part of the study, 46% expected a decline in operating results. According to the authors of the study, this is the worst level of sentiment in 15 years.

The interest business continues to be the central pillar of earnings for many Swiss banks. With the key interest rates, which have recently been gradually lowered to zero per cent, the interest margin has continuously decreased, the authors of the Banking Barometer note.

Institutions are now once again facing an environment with low margins in the interest business, in which there is little room for optimisation.

Accordingly, institutions that are heavily involved in the interest business, such as regional and cantonal banks, are particularly affected by the falling business results. In previous years, they had still achieved record results thanks to a higher interest rate environment.

By contrast, private banks and foreign banks are much less pessimistic thanks to stable commission income.

Swiss banks also remain confident in the long term: over a period of more than three years, almost all banks (94%) expect operating results to rise. This is more than in the previous year (85%).

According to EY, the banks continue to trust in their business model and the strength of the Swiss financial centre.

Adapted from German by DeepL/mga

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