Migros Bank, the financial-services arm of the Swiss retail giant, increased its profit in 2019. The bank plans a further expansion of its branch network, despite the squeeze on margins.
Net income rose 12 percent to 255 million Swiss francs ($264 million) in 2019, Migros Bank said in a statement on Friday (statement in German). The disproportionate increase in profit was due to the sale of two properties, which resulted in a single-digit million-franc profit.
Revenues increased 3.2 percent to 640 million, with the main contribution coming from interest income. It rose 4.2 percent to 489 million francs. Commissions were flat at 102 million francs, while trading income was up 18 percent to 39.7 million francs. The cost-income ratio at Migros Bank improved to 46.9 percent from 47.4 percent a year ago.
Abolished Variable Bonus Payment
Total operating costs at Migros Bank rose less than its revenues, adding 2.4 percent to 302.9 million francs. Personnel costs, the biggest component, increase 2.8 percent to 184.6 million francs. Migros Bank abolished bonus payments in 2019. It said that staff commitment and dedication hadn't suffered as a consequence.
Migros Bank also said that its clients demanded more sustainability funds in the reporting period. The volume of such funds added 27 percent to 415 million francs. The total volume of assets held in client portfolios increased 16 percent to 13 billion francs. Mortgages added 3.6 percent to 38.3 billion francs.
Expanding Branch Network
Migros Bank expects business conditions to remain challenging due to the pressure on margins in the interest business. The bank will open at least two more branches in 2020. The network of branches is a vital component for the success of the bank, which aims to provide services to its clients in person.
