Zuercher Kantonalbank has managed to boost its first-half profit as a boom in trading increased revenues. It has also received a fair amount of new money from clients.

The state bank of the canton of Zurich has not been badly hit by the Covid-19 crisis. It put aside 7 million francs as cover for credit risks – an amount that was dwarfed by the surge in trading revenue, according to the half-year result presented by the bank on Friday.

Zuercher Kantonalbank (ZKB) generated first-half net income of 537 million Swiss francs ($593 million), up 28 percent from the same period a year ago. All of the bank’s revenue-generating units contributed to the increase, with trading income first and foremost. The business more than doubled to 272 million francs.

Extraordinary Trading Activities

The surge in trading income reflected a high level of client activity during the period of market turmoil. Income from trading in bonds as well as interest and credit derivatives contributed to this increase. It was also driven by trading in foreign exchange, bank notes and precious metals, as well as equities and structured products, the bank said. Trading activities have now returned to normal market levels.

Net interest income rose a more moderate 2.1 percent to 619 million francs. In addition to the growth in lending, the charging of negative interest to major clients led to a slight improvement in income from interest operations. The mortgage business was also up, by 1.7 percent to 85.7 billion francs. Net commission and fee income rose 4.5 percent to 404 million francs.

Covid-19 Loans at 1 Billion Francs

Net new money of 13.6 billion francs more than offset the decline of the value of customer assets. In total, assets grew by 4.5 billion francs to 337.8 billion francs.

The bank also granted almost 1 billion francs in Covid-19 loans to more than 7,600 firms. The vast majority of companies took up loans with a federal guarantee of as much as half a million francs.

Strong Improvement of Cost-Income-Ratio

Thanks to the substantial boost in revenue, ZKB was able to improve the cost-income-ratio to 55.2 percent, compared with 59.1 percent at the end of the first half of 2019.