The Zuercher Kantonal Bank posted a record profit last year, reporting a profit of over one billion Swiss francs for the first time. It also attracted significantly higher new client money.
The state-owned Zuercher Kantonal Bank (ZKB) posted a record consolidated net profit of 1.059 billion Swiss francs ($1.15 billion) last year, topping the one billion mark for the first time in its history, according to full-year results announced today. That is an improvement of 12.3 percent from the 942 million franc profit in 2021.
Operating income improved by 208 million francs year-on-year to 2.752 billion. Operating expenses amounted to 1.594 billion francs and increased by 5.1 percent, significantly less than operating income. As a result, the cost/income ratio fell from 58.7 to 57.5 percent.
Its assets under management nearly recovered to their levels at the end of 2021. ZBK attracted 33.9 billion francs of new money for the year, which added to the 17.8 billion it attracted through the end of June. The new cash it attracted last year is an increase of 31.2 percent from the 25.853 billion that clients brought to the bank in 2021.
ZKB had 399.965 billion francs under management at the end of last year, down 2.3 percent from 409.190 the year before.
The new money clients entrusted to ZBK is in stark contrast to Credit Suisse which last year saw 123.2 billion outflows of client funds.
Negative Interest Rates
An end to negative interest rates from the Swiss National bank provided a tailwind for traditional interest rate business, which ZKB said is its most essential earnings pillar. The return to positive interest rates had a positive impact on gross interest income, which increased by 134 million francs to 1.421 billion.
At the same time, rising interest rates in the Swiss franc, euro, and dollar areas improved previously negative margins on the liabilities side, while the years of payments of negative interest to the SNB have ceased.
Increased Dividend
As a result of the favorable outcome, ZKB will raise the dividend it pays to the Canton of Zurich and the municipalities by 14.1 percent to 491 million Swiss francs, of which the Canton will receive 329 million and the municipalities 160 million. The rest will go to cover costs. This will be welcome news for the Canton since the Swiss National Bank suspended its payment to the government and Cantons after a record loss last year.
No Recession Seen
«Globally, the economy continues to weaken. Persistently high inflation and the associated interest rate increases remain challenging for companies. However, we still expect positive growth for Switzerland in 2023, albeit at a much slower pace. We do not see a recession,» says CEO Urs Baumann.
He added that «as a sustainably oriented universal bank with a diversified and long-term business model, we are therefore confident that the bank will again generate an appealing result in 2023.»
Baumann became CEO on September 1 last year, replacing Martin Scholl, who led the bank since mid-2007 and was one of the longest-serving Swiss bank CEOs.
