Zurich's state-backed lender advanced in wealth management last year, while its traditional interest business stagnated.
Zuercher Kantonalbank said full-year net edged just 3 percent higher to 782 million Swiss francs, the bank said in a statement on Friday. The result was buoyed by a 6 percent climb commissions and fees to 770 million. The bank said the healthier result was thanks to more activity in its securities trading and investment arm.
Zurich-based ZKB didn't mention a long-running U.S. criminal probe over tax evasion that, like Geneva's Pictet & Cie, it is waiting to settle. Rivals such as Credit Suisse and Julius Baer have been able to put the probe behind them by paying hefty fines.
Private Banking Push
ZKB's assets under management rose to 288.8 billion francs, from 264.8 billion at the end of 2016. The result was underpinned by 6.3 billion francs in new money, while favorable market conditions contributed another 16.7 billion francs.
Traditionally a small business and mortgage lender, ZKB is increasingly trying to push into wealth management. This year, it launched a new investment program for wealthy clients, including a digital push.
Trading Drop
The necessity to expand beyond lending was obvious in its interest income, which typically makes up roughly half of overall revenue. Last year, interest income edged just 1 percent higher to 1.2 billion francs, as the pace of mortgage lending slowed. Home loan volume rose just 2.3 percent to 79.1 billion francs.
ZKB suffered a 12 percent drop in trading to 334 million francs. Like most firms, ZKB was hit by lack of volatility in markets in the second half, as well as narrowing bid-ask spreads.
The bank pared back its spending by 5 percent to 1.43 billion, which lead its cost-income ratio 60 basis points lower to 61.1 percent. ZKB will pay its shareholders – the canton of Zurich and individual communities – a total of 363 million francs, slightly higher on the year.
