Clarity on Performance of Swiss Private Banks | KPMG | CH
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Recovery of a divided industry

Clarity on Performance
of Swiss Private Banks

After years of structural change, Switzerland’s private banks are finally recovering and made significant progress on the back of bull markets. While turning their attention to strategy they still need to improve, since a market downturn could reverse the current optimism.

Clarity in 100 seconds

Consolidation slows down

2017 produced a record number of 16 M&A transactions. There was a particular peak in acquisitions and disposals abroad over the past 18 months as banks actively adjusted their business portfolios. And current bull markets are pushing up prices, which may encourage further divestments in the short term.

Number of Swiss private banks by AuM

Large (AuM ≥ CHF25bn)
Medium (AuM CHF5bn – CHF25bn)
Small (AuM ≤ CHF5bn)

56 banks have exited the market since 2010. Although the consolidation slowed in the first half of 2018, a number of loss-making banks remain. Now may be a good time for them to actively consider a sale.

Strategy ahead: The industry is in the best shape for years

With regulations largely implemented and one-off fines mostly confined to the past, banks have an opportunity to introduce strategic change. They should seize the opportunity to reshape their business and operating models to deliver future performance improvements.

Christian Hintermann

Head of Financial Services Transformation

Contact details

Where is your bank today?

Our interactive benchmarking tool contains the financial data of more than 100 Swiss private banks and shows more than 50 key performance indicators. Compare your bank with its competitors and find out where your bank can improve its performance. Although the tool is designed to be used in a workshop environment, you can learn here how it works and view example data to see how you could benefit from the insights it provides.

Find out where your bank stands today

Empower your performance

Contact Christian Hintermann

Strong markets support improvements

Bull financial markets helped two-thirds of the banks improve their RoE in 2017. But the overall picture is one of marked contrasts. While RoE rose significantly at more than 80% of the banks in the category of strong and upper mid performers, less than half of mid and weak performers saw any improvement.

RoE development (CHFbn)

Middle 50%
Median

82% of the banks above the median improved their RoE by an average of 1.8 percentage points. Those below the median saw an increase of 0.8 percentage points. Overall, the median fell from 4.5% to 4.0%.

The gap widens

A widening gap between banks is evident in the cost-income ratio. Around 80% of banks in the stronger half of the industry substantially improved this key measure of operational performance in 2017. Far fewer banks in the weaker half improved at all.

Cost-income ratio development

Middle 50%
Median

The median cost-income ratio fell only slightly, yet while strong and upper mid performers improved, the weaker half of the industry remained almost unchanged.

Seeking new money

Favorable global equity markets drove performance increases last year, accounting for around 90% of AuM growth. NNM remained disappointingly low – and negative for the group of medium-sized banks.

AuM development (CHFbn)

AuM
M&A
Performance
NNM
Other

While the main driver of AuM growth in 2016 was M&A, it was booming equity markets in 2017. NNM was a mere CHF21bn in 2017, with around half of the banks experiencing net outflows of assets.

Income and expenses grew in parallel

Bull market performances largely contributed to a 10% increase in the industry’s operating income. However, operating expenses grew at almost the same rate. But the non-recurrence of substantial fines from 2015 helped the industry return profitability to an even footing.

Industry financial statement

Operating income
Operating expenses
Gross profit

Our industry figures are the aggregate of the annual financial statements of our constant sample of 90 banks. The increase in average FTEs pushed operating expenses higher, almost in line with the rise in operating income.

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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 Transformation

Contact details

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Media release

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