Raiffeisen Switzerland has successfully weathered the storm that followed the investigations into the activities of former executives: thanks largely to lower spending on material and staff, the bank boosted its profit by half in 2019.
Net income at Raiffeisen Switzerland rose 54 percent to 835 million Swiss francs ($858 million) in 2019, according to a statement released on Thursday. The bank added 36,000 new clients and increased assets under management by 7.6 percent to 211 million francs.
Switzerland's third-largest bank is one of the dominant players in the country's home loans market, a business that remained attractive for retail banks as interest rates dropped below zero. Raiffeisen in 2019 increased mortgages by 3.2 percent to 185 billion francs.
Improved Profitability
The bank, which has its headquarters in St. Gallen, profited from a reduction in operating expenses that followed the introduction of a new core-banking system at the end of 2018. Spending on staff declined by 4.2 percent and overall spending was down 6.3 percent.
As a consequence of the reduction in spending, Raiffeisen was able to improve the cost-income ratio to 61.3 percent from 64.9 percent.
Raiffeisen in recent years had been rocked by revelations about alleged insider deals by former executives, allegations that led to criminal investigations and the arrest of former CEO Pierin Vincenz. The start of the expected trial against Vincenz has yet to be announced by the Zurich law authorities.
Emergency Plan Submission
The Swiss banking regulator earlier this week said that the emergency plan of Raiffeisen (along with two other domestic banks) didn't meet the statutory requirements. The five systemically important banks in Switzerland were required to submit a plan for how they expect to guarantee the continuation of their systemically important business without interruption.
Raiffeisen today said it will submit its emergency plan by mid-2020 to Finma.
