Net income at Switzerland’s Raiffeisen bank dropped 6.6 percent last year, due to investments in its infrastructure and a write-down on the stake in Leonteq.
Net income at Raiffeisen Group declined to 754.1 million Swiss francs in 2016 from 807.7 million a year earlier, the company said in a statement today.
The main reason for the drop in profit was a write-down of 69 million francs on a stake in Leonteq, a derivatives specialist. Raiffeisen owns 30 percent of the company and was forced to adjust the value of the company on its books after the share of Leonteq lost about three quarters of its value.
By contrast, Raiffeisen posted a one-off gain of 64 million francs from the sale of the asset management unit Vescore to Bank Vontobel.
Healthy Mortgage Business
Notenstein La Roche, the private-banking unit, contributed 17.6 million francs to the group’s profit, less than Raiffeisen had expected. The private bank is currently being trimmed and its offerings are reevaluated.
The main source of income at Switzerland’s fourth-largest bank is the business with mortgages. It expanded at a faster pace than the market average last year, with loans increasing 4.3 percent to 165.4 billion francs. Raiffeisen has a market share of 17.2 percent.
Introduction of Core Banking System
The bank doesn’t expect the growth to affect the risks of default. «We are not active in speculative markets and are among the safest banks in Switzerland,» said Raiffeisen CEO Patrik Gisel.
The bank this year will focus on the introduction of the new core banking system. Raiffeisen expects to have a slightly higher operative profit in 2017.
