SNB confirms the resilience of Swiss banks

The SNB notes that Swiss banks have substantial capital and liquidity buffers. In the stress scenarios conducted by the SNB, they have largely proved resilient, even with their current capital and liquidity levels. Against this backdrop, the Swiss Bankers Association (SBVg) considers that there is no justification for calls for higher capital requirements.

Furthermore, according to the report, the banking sector’s profitability is developing positively overall. This once again underlines the Swiss banking sector’s ability to fulfil its central role in financing businesses and households, even under difficult economic and regulatory conditions.

“The report confirms the solid state of the Swiss banking sector. This strength forms the basis for banks to reliably finance the economy even under challenging conditions,” says Martin Hess, Head of Economic Policy and Chief Economist at the Swiss Bankers Association.

At the same time, the SNB points to continuing vulnerabilities in the Swiss property and mortgage markets. Mortgage debt remains high and residential property prices have recently gained momentum once again. This is driven by a shortage of residential property on offer, which is met by high demand fuelled by population growth and low interest rates.

It is encouraging that the SNB is critically reviewing its previous methodology for assessing affordability risks. These risks decrease significantly when the financial assets of mortgage borrowers are taken into account. This also confirms the banks’ cautious lending practices. Any new requirements regarding affordability would therefore be unfounded.

The report also shows that risks to financial stability are increasingly emerging outside the traditional banking sector. The SNB is therefore paying particular attention to issues such as cyber risks, operational risks, the growing importance of non-banks in the financial system, and stablecoins. It explicitly points out that stablecoins may pose risks to financial stability in Switzerland even if they are issued in less heavily regulated countries. It is therefore logical that the SNB considers appropriate international regulatory coordination to be desirable, as is the case in other areas of the financial sector.