Luzern's Cantonal Bank said new money inflows are «gratifying.»  It sees no signs of increased credit risk despite rising interest rates. 

Luzerner Kantonalbank (LUKB) reported a consolidated profit of 128 million Swiss francs ($144.8 million) in the first half of 2023, a 17 million franc increase from the same period last year. For the full year, it raised the target for consolidated net profit from the previous minimum of 235 million francs to between 250 to 265 million francs, according to a statement Tuesday.

Gratifying Net New Money

After a challenging year in 2022, «client assets under management benefit from gratifyingly high net new money,» LUKB said. At the end of June it held 37.6 billion in managed client assets, up 4.6 percent from the end of last year. Net new money growth contributed 1.2 billion in the first half with positive performance contributing 418 million to the increase. LUKB acquired net new money of 1.42 billion during all of last year.

No Signs of Increased Credit Risk
«LUKB currently sees no signs of higher credit risks, even against the backdrop of rising lending rates. At 2.3 million Swiss francs, allowances for default risks are 6.3 million francs, or 72.7% lower than the figure for the same period in 2022. This figure demonstrates the unchanged very good quality of our credit risk book,» said CFO Marcel Hurschler. 

Compared to the first half of last year, LUKB increased gross interest income by 7.2 million francs to 207.7 million, up 3.6 percent, and net interest income by 13.5 million to 205.4 million, a gain of 7 percent.

«We were very quick to offer our customers attractive interest rates on savings and investment accounts again. Our current interest rate of 1 percent on savings accounts up to a balance of 100,000 francs and 0.9 percent for balances over 100,000 francs compares favorably with the competition. With this customer-friendly conditions policy, we consciously accept the fact that we currently have lower growth rates in the interest business than our competitors,» Hurschler said.

But «we're convinced that an attractive conditions policy that's adjusted promptly is central to high customer satisfaction. This in turn leads to a positive development of our bank in the long term.»