Swiss retail bank Valiant increased its profit marginally last year. There are plenty of challenges however waiting for the new CEO who is due to take over in May.
Bern-based Valiant increased net income by 1 percent in 2018, the company said in a statement on Wednesday. Profit amounted to 120.3 million Swiss francs ($119.6 million), with the rise attributed to higher net interest income.
The bank proposes to raise the dividend by 10 percent to 4.40 francs per share, the fourth increase in a row.
Mighty Pleased
«Valiant pulled off a rare feat for the Swiss banking sector last year, increasing its net interest margin while still achieving growth and maintaining a prudent risk policy,» said the bank in its statement. The net interest margin added two basis points to 1.12 percent. «I wouldn’t have dared dream of that at the beginning of the year,» added CEO Markus Gygax.
The bank generated a higher net interest margin by paying less interest itself (interest expenses were down by a fifth), which Valiant achieved in part through its covered bond issues. Net interest income rose 3.8 percent to 307.3 million francs.
Focus on Fee and Commission Income
Ewald Burgener, who will take over from Gygax, will have to focus on boosting the company’s fee and commission income going forward. Valiant failed to increase this type of income last year – it was flat at 62.3 million francs.
«We cannot allow ourselves to be satisfied with the fee and commission income figure,» Burgener commented. «We have to grow this business and generate more recurring income. The investment business in particular is an important income driver for our bank, and we must continue to strengthen it.»
Gygax will hand over his responsibilities as CEO to current Chief Finance Officer Burgener in May. Gygax has been nominated for the board of directors.
New Strategy Pending
Valiant expects net income to increase «slightly» in 2019. It aims to keep the net interest margin as close to the 2018 level as possible, achieve lending growth of about 3 percent and improve fee and commission income.
The management and board of the bank will devote time to evaluate the bank’s future in coming months. «Traditional retail banking is under pressure, and huge challenges remain,» Valiant said. «The new strategy for the period up to 2024 will be presented this autumn.»
This year, Valiant will launch new branches in St. Gallen, Wil and Rheinfelden. It also plans to expand the offices in Winterthur, dedicated to the business with small- and medium-sized companies.
