Swiss banks’ profit halves to CHF 7.9 bn; staff count down

Banks in Switzerland saw their profits nearly halved to CHF 7.9 billion (over Rs 53,000 crore) in 2016 amid continuing global pressure on their famed secrecy walls.

Surprisingly, the overall customer deposits, domestic as well as foreign, rose in Swiss banks.

The staff count however was down.

The number of banks in Switzerland declined again last year, from 266 to 261. While two new banks came up seven moved out from the list, as per the annual statistics released today by Zurich-based Swiss National Bank (SNB), the country’s central banking authority.

The Big players

The number has been falling for past few years.

The two fresh inclusions in 2016 were due to the establishment of one new bank each in the categories of big banks and branches of foreign banks.

Two banks were acquired by other banks, one was liquidated, three banks lost their status as a bank, and one was closed.

The big banks category now comprises four institutions-UBS Inc, UBS Switzerland AG, Credit Suisse AG and Credit Suisse (Switzerland) Ltd.

Of the 261 banks covered, 226 registered profit. Their aggregate profit declined by CHF 7.8 billion to CHF 11.8 billion. The loss recorded by the remaining 35 institutions totalled CHF 3.9 billion (up CHF 0.1 billion). Taken together, the profits and losses produced an aggregate result of the period of CHF 7.9 billion.

This marks a 50 per cent plunge from CHF 15.8 billion (over Rs 1.06 lakh crore) in 2015.

Breakdown of the balance sheet

In the year under review, the aggregate balance sheet total for all banks in Switzerland rose by 2.5 per cent to CHF 3,100.8 billion (up 2.5 per cent).

The breakdown by domestic and foreign segments shows that the rise in the balance sheet total occurred mainly in Switzerland, with domestic assets advancing by 6.8 per cent or CHF 118.6 billion, and domestic liabilities by 4.6 per cent or CHF 75.4 billion.

The increases were attributable primarily to amounts due from/to domestic banks in Swiss francs. Foreign assets, by contrast, declined (down 3.4 per cent or CHF 43.8 billion), while total foreign liabilities remained almost unchanged.

Amounts due in respect of customer deposits registered an increase of CHF 47.4 billion to CHF 1,770.6 billion (up 2.7 per cent).

Domestic deposits (up CHF 40.9 billion to CHF 1,135.7 billion) accounted for the largest part of this increase, with the big banks (up CHF 16.3 billion to CHF 340.2 billion) in particular recording higher holdings.

Amounts due in respect of customer deposits from abroad rose by CHF 6.5 billion to CHF 634.9 billion, with the increase of CHF 15.8 billion to CHF 366.6 billion in the big banks category standing in contrast to the decline of CHF 10.4 billion to CHF 111.9 billion in the case of the foreign— controlled banks.

Amounts due in respect of customer deposits represented somewhat less than 60 per cent of the aggregate balance sheet total for all banks in 2016.

Banks reduced their staff numbers in terms of full-time equivalents to 120,843 (down 3,047 or 2.5 per cent).

The number of staff employed in Switzerland declined to 101,382 (down 1,660 or 1.6 per cent) and the number abroad to 19,461 (down 1,387 or 6.7 per cent).

Foreign-controlled banks also recorded a reduction in staff (by 1,093, of whom 434 abroad). At 38.5 per cent, the proportion of employed women remained almost unchanged.

At the end of the year under review, customer holdings of securities in custody accounts amounted to CHF 5,654.1 billion (up 1.2 per cent). Fiduciary funds administered by banks increased to CHF 121.0 billion.

For the first time since 2007, fiduciary funds managed by banks rose, by CHF 7 billion to CHF 121 billion.

Since fiduciary funds mainly get invested in money market, the diverging movements in money market interest rates impacted the currency breakdown of total holdings, SNB said.

Regarding fiduciary deposits from abroad, those from developed countries were up by 14.9 per cent, from offshore centres, by 2.7 per cent, and those from developing countries by 2.3 per cent.

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