The cantonal bank of Geneva has been hit hard by the corona-crisis and decided to take provisions as it prepares for a further deterioration of the economic situation.
The corona-crisis hasn't been kind on Banque Cantonale de Genève (BCGE), which is majority-owned by the canton and the city of Geneva. Operating profit declined by 46.5 percent in the six months through June. Net income was down 6.6 percent to 55 million francs.
The bank still managed to grow its business, with mortgage loans up 1.9 percent to 11.9 billion francs and assets under management up 1.7 percent to 30.9 billion francs. The cantonal bank issued Covid-19 loans worth 200 million francs during the crisis.
Decline of Full-Year Profit Expected
The company raised its equity capital slightly to 1.675 billion as a reaction to the crisis. The ratio of regulatory capital available is 16 percent. BCGE also added to provisions to cover for eventual loan losses. Provisions were up 61 percent compared with December 2019.
By increasing provisions, the bank is taking precautions against a possible further worsening of the economy. It expects a lower full-year profit as a consequence. The bank still expects an equity capital growth and the payment of a dividend.
