Berner Kantonalbank has had a bumper year and will increase its dividend for a 24th consecutive time. The state bank of the canton of Bern will also continue it drive to refurbish the branch network.
Profit at state-owned Berner Kantonalbank (BEKB) rose 1.5 percent to 142.9 million Swiss francs ($147 million), according to a statement released by the bank on Thursday. Assets under management increased by 1.3 billion francs over the course of last year to reach 18.9 billion by yearend.
The new chief executive of BEKB, Armin Brun, said business had been «pleasing», leading to a «strong» result. Brun, who has been in charge of the state bank of the canton of Bern since July 2019, sees the business strategy confirmed by the increase in earnings and growth.
The main contributor to a higher profit was the net contribution from the interest business, which increased by more than 5 percent to 288.1 million francs.
Higher Personnel costs
BEKB also boosted its business with private and corporate clients. Mortgage lending increased by 1 billion francs to 22.7 billion, an increase by about 4.8 percent. Cantonal banks in Switzerland typically are big lenders to homeowners.
Operating costs rose by 500,000 francs to 248.3 million francs, driven by higher personnel costs. The bank has about 1,200 employees.
Branch Refurbishments
BEKB promised to increase the dividend for a 24th consecutive time, by 40 centimes to 8.4 francs. The dividend yield amounts to 3.6 percent.
The bank plans to refurbish nine branches in 2020. BEKB has pledged to spend some 10 million francs on a renovation plan every year.
Outlook
BEKB expects interest rates to remain low for the foreseeable future. The current negative rates applied by the Swiss National Bank are putting a squeeze on its interest margin, the bank said.
Still, as the company also keeps strict cost discipline and with lower costs for hedging against interest rate changes, it expects to generate a profit of 140 to 150 million francs in 2020.
