Raiffeisen increases profit thanks to strong interest business
Published: Thursday, Mar 7th 2024, 14:10
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The Raiffeisen Group benefited from the improved interest rate environment last year and significantly increased its profit. The Raiffeisen banks were able to slightly increase their market share in the mortgage market.
Switzerland's second-largest banking group since the disappearance of CS increased its group profit by 17.7 percent to CHF 1.39 billion last year, as it announced on Thursday.
In an "outstanding year", Raiffeisen was able to grow in all business areas, said Raiffeisen CEO Heinz Huber at the annual media conference in Zurich. The number of customers rose by a further 55,000 and stood at just under 3.7 million at the end of the year.
Increased interest margin
The rapid growth in total income by over 15 percent to CHF 4.1 billion was primarily due to the important interest business, which increased by around a fifth. As with other domestic banks, the end of the Swiss National Bank's (SNB) negative interest rate policy led to significantly better conditions: At 1.08 percent, the interest margin exceeded 1 percent for the first time in five years, said CFO Christian Poerschke.
In the mortgage business, the Raiffeisen Group grew at a similar rate to the previous year with an increase in receivables of 3.6%: CEO Huber put Raiffeisen's market share at 17.8%, slightly higher than in the previous year (17.6%). Raiffeisen's aim here is to grow with the market, he emphasized.
Number of jobs increased
Raiffeisen also made gains in the investment and pension business. Customers opened around 25,000 new custody accounts and recorded a net new money inflow of around 2.9 billion francs. Income from the commission and services business also increased significantly (+5.6 percent).
On the cost side, an increase in personnel was particularly significant: the number of employees across the Group rose by 404 to 10,305 full-time positions, with the additional staff being deployed primarily to support customers on site. The cost/income ratio of 51.9 percent is at a good level, emphasized Huber.
Own funds expanded
Raiffeisen was able to further increase its equity capital by allocating 92% of its annual profit to reserves. In addition, the bank received new cooperative capital amounting to 344 million francs, not least thanks to the conversion of former branches of the Raiffeisen Switzerland Group headquarters into cooperative banks.
With its own funds and additional loss-absorbing funds ("gone-concern"), the Raiffeisen Group also clearly meets Finma's capital requirements for systemically important banks ahead of schedule, the CFO emphasized: it also does not have to make use of the transitional periods that run until 2026.
Raiffeisen executives were cautious about the new year: they expect the interest margin to be lower again this year. With the Swiss economy expected to be less dynamic, he anticipates a "solid course of business", but expects the result to be below the previous year's level, said CEO Huber.
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