Clarity on Performance of Swiss Private Banks | KPMG | CH

Clarity on Performance
of Swiss Private Banks

Some limited change. Not radical enough.

Clarity in 100 seconds

Consolidation slows in 2016 and first half of 2017

Larger consolidator banks have turned their attention away from smaller deals. This comes as buyers generally have narrower target criteria, owners feel less pressure to sell at sub-optimal deal terms, and fewer banks are available. The combined result is a sharp slowdown in consolidation in the Swiss market over 2016 and the first half of 2017.

Number of Swiss private banks

Median - Operating Income Margin (bps) Number of Swiss Private Banks 108 99 102 99 105 97 89 2005 2007 2009 2011 2013 2015 1H 2017 179 173 171 168 168 163 158 147 138 131 119 114 112

Operating income margin fell to its lowest level in the past six years in 2016. At a median of 89bps, this had the effect of dragging down the industry’s gross profit.

Christian Hintermann

Partner, Head of Advisory Financial Services


Responsible for advisory solutions to the financial sector, Christian focuses on transformation issues in wealth management and has authored many studies on the industry. He has also been involved in many of the large M&A transactions involving private banks in Switzerland over the past few years.

Contact details

Interactive tool: Benchmarking against your peers

Leveraging our private banking database consisting of financial data from 93 Swiss private banks - covering 83% of the market - KPMG's interactive benchmarking tool contains more than 50 key performance indicators. The tool enables a detailed comparison with your peers so that you can identify opportunities for performance improvement. Using the tool in a workshop setting delivers the best results as we help you identify specific performance improvement areas and outline practical and effective implementation strategies.

Find out where your bank stands today

Get your tailored benchmark

Contact Christian Hintermann now

Return on Equity

Despite falling gross profit margins, net profit levels have stayed stable
7.7% 7.7% 7.2% 6.5% 8.2% 6.9% 6.2% 0.2% 0.3% 0.5% 0.5% 1.7% 1.0% 0.8% 2010 2011 2012 2013 2014 2015 2016 Middle 50% Median 4.3% 3.0% 4.0% 3.9% 4.2% 3.9% 4.1%

Median RoE has remained at around 4% for the past five years. With banks’ cost of capital estimated at 7% to 10%, – owners’ value is being diluted. Despite falling gross profit margins in the last two years, net profit levels have stayed stable thanks to one-off gains that are not expected to continue in the long term. (Median RoE development 2010 to 2016)

Net New Money Growth

It’s difficult to find enough new clients to realize growth
19.4 39.1 7.1 23.7 21.3 -43.2 CHFbn 2011 2012 2013 2014 2015 2016

A strategic refocusing on core markets and client segments cost Swiss banks 3% of AuM in 2016, or a net outflow of CHF43 billion. This proactive stance in cutting the number of markets and client segments serviced puts them in a better position, though many are finding it difficult to find enough new clients to realize growth ambitions as 56% of the banks experienced outflows in 2016. (Aggregate NNM development 2011 to 2016)

Cost-income ratio development

Cost-income ratio rose to its highest level in the past seven years
95% 70% 98% 67% 93% 69% 90% 69% 89% 68% 92% 70% 93% 72% 2010 2011 2012 2013 2014 2015 2016 81% 83% 79% 79% 79% 82% 84% Middle 50% Median

Banks are struggling to cut costs sufficiently to match the pace of falling operating income margins. The result: Cost-income ratio rose to its highest level in the past seven years, at 84%. Whilst some banks have started with radical change to increase income margins and reduce costs, most of the banks have not. (Median cost-income ratio development 2010 to 2016)

Clarity on Performance of Swiss Private Banks

Get the full publication

Download the PDF now

KPMG Switzerland

Your contacts

Philipp Rickert

Partner, Head of Financial Services and Member of the Executive Committee

Contact details

Christian Hintermann

Partner, Head of Financial Services Advisory

Contact details

Further information

Banking

Regulations, capital requirements and digitalization are among the challenges currently facing the banking industry. KPMG brings innovative solutions.

Read more
Blog

Christian Hintermann points out the industry’s key challenges.

Read more
Media release

Many Swiss private banks are just treading water.

Read more