Banks held up well in pandemic year

The Swiss economy has withstood the pandemic well to date, as have the 243 banks that were operating in Switzerland at the end of 2020. They have presented solid results. Aggregate net income rose by 5.8% to CHF 69.9 bn. This was helped significantly by a 46.7% year-on-year increase in the result from trading activities due to higher market volatility in 2020, which led to more trading by customers. The result from interest operations fell by 0.9% against a backdrop of low interest rates, while the result from commission business and services was up around 3%.

Mortgage loans as largest asset item

At the end of 2020, the balance sheet total of all banks was up 4.5% year-on-year at CHF 3,467.3 bn. The largest asset item was mortgage loans, which, at CHF 1,098.0 bn, made up 31.7% of total assets. As in the previous ten years, the banks increased their mortgage lending further in 2020 (by 3.1%). The Swiss National Bank increased the threshold factor for exempting sight deposit account balances from negative interest in order to strengthen the banks’ role as suppliers of credit. The banks’ liquid assets, meanwhile, showed a significant increase of 26.1%. 

Sharp rise in sight deposits due to low interest rates and high saving rates

Amounts due in respect of customer deposits rose by a further 8.7% in 2020 and dominate the liabilities side of the banks’ balance sheets with a 56.9% share. There is a marked shift behind this overall increase: sight deposits were up almost 30% due to an unusually high saving rate, rotations and statistical effects, whereas time deposits fell by around 16% as a result of negative interest rates.

Assets under management unchanged year-on-year

Assets under management ended 2020 virtually unchanged compared with the previous year at CHF 7,878.7 bn. Domestic customers’ assets under management grew by CHF 93.2 bn, while those of foreign-domiciled customers declined by CHF 108.0 bn. With a market share of 24%, Switzerland is the global leader in cross-border wealth management.

Staff numbers rising during pandemic

The number of people employed by the banks rose slightly in 2020 for the first time in a decade, adding 414 full-time equivalents. According to an SBA survey, the banks’ headcount rose further by around 1% in the first half of 2021, with the number of foreign jobs growing faster (by 1.8%) than the number of domestic jobs (0.2%). However, this does not necessarily signal a reversal of the long-term trend in banking sector employment.

Economic recovery in first half of 2021

As the economy recovered from the pandemic, monetary policy remained expansionary, and stock markets performed well, the banks’ assets under management grew by 6.9% in the first five months of 2021. The balance sheet total grew by 3.0% in the same period, with amounts due from securities financing transactions and amounts due from banks showing the largest increases on the assets side. Mortgage loans appear to be matching last year’s growth in 2021. On the liabilities side, customers’ sight deposits increased further, as did amounts due to banks. As mentioned above, the SBA survey revealed an increase of around 1% in the number of staff during the first half of the year. Whether this positive trend in banking business can persist in the second half of the year depends to a great extent on how the pandemic situation develops going forward.

About the Banking Barometer

The SBA’s annual Banking Barometer details the key figures and trends in the Swiss banking sector based on data supplied by the Swiss National Bank (SNB) as well as the results of surveys conducted among member institutions. It is available for the first time as an interactive, reader-friendly web publication. The Banking Barometer will be presented to the media in an online event at 9.30 a.m. today by Martin Hess, Head of Economic and Monetary Policy, and Thomas Rühl, Head of Research. All relevant documents, together with additional facts and figures, can be found on our website.