The banks in Switzerland put in a solid performance in 2022 despite the difficult environment, posting income that was almost stable year-on-year, and the figures for 2023 also bode well despite the challenges that still persist. The Swiss Banking Outlook, published for the first time this year, forecasts an increase in net income and identifies a number of opportunities from which the banks stand to profit.
The banking sector makes a vital contribution to the success of Switzerland’s economy and financial centre. The country is one of the world’s leading financial centres and the number one in cross-border wealth management. The events leading up to the takeover of Credit Suisse by UBS caused shifts in customer funds.
Weak economic growth and inflation above 2% expected for 2023
The Swiss Banking Outlook forecasts economic growth of 0.9% and an inflation rate of 2.4% for the year as a whole. A majority of the experts surveyed do not expect the SNB to hike interest rates beyond the current level of 1.75%. The macroeconomic picture looks somewhat more optimistic for 2024, with economic growth of 1.5%, lower inflation and a turnaround in interest rates expected.
Growth in net income in 2023 mainly driven by interest operations
The Swiss Banking Outlook predicts higher net income for the banks in Switzerland in 2023, once again driven mainly by a higher result from interest operations. As regards mortgages, meanwhile, the majority of the experts surveyed expect higher interest rates and modest economic growth to lead to a below-average increase for the year as a whole.
Digital customer experience and sustainable finance seen as major opportunities
Besides rising interest rates, the Swiss Banking Outlook also suggests that the future earnings prospects of banks in Switzerland hinge on further improvements in the customer experience thanks to digital channels and on continued efforts to promote sustainable finance. Strong growth in volumes is anticipated for sustainable investments in 2023. Risks to Swiss banks’ income are seen in particular in the high cost of adapting IT systems and the increasing density of regulation.
More information: Banking Barometer 2023 - Banking Barometer 2023 (swissbanking.ch)