Key findings of âBanking Barometer 2006â include:
Earnings increased by 17 percent in 2005 with assets under management (AUM) growÂing 25 percent last year. A positive market environment, coupled with low interest rates, rising share prices and increased trading on financial markets drove the growth in overall operating income at Swiss banks â totaling nearly 70 billion Swiss francs ($US 56.25 billion) in 2005. The boost can be attributed to increases in income from the commission and services business, as well as trading operations.
Assets Management Boom
Swiss banks saw AUM rise by as much as a quarter by the end of 2005, including a sharp rise in institutional assets, with international clients contributing more than domesÂtic customers. Asset management has established itself as a key element in the core business of Swiss banks, accounting for over 40 percent of their overall earnings in 2005. Another finding proved that Switzerland remains a key financial center in Europe and an attractive place for asset management and other businesses.
Flat Profits in the Credit Business
While the credit industry continues to suffer from demanding competition and very little growth potential, the volume of credit grew four percent by the end of 2005 as a result of favorable mortgage rates.
Job Growth Reported
The employment situation in the Swiss banking industry also improved, registering a one percent increase in staff levels by mid-2006, which is equivalent to about 1,100 full-time jobs. The biggest increase in jobs was seen in private banking.
2006 Earnings Forecast
The growth in earnings and managed assets at Swiss banks should continue throughout 2006. Furthermore, investment and private banking, IPOs and M&A are expected to perÂform well for the rest of the year. Comprehensive growth for 2006 is expected to rise 10 percent in the commission and services sector with a double-digit growth in trading busiÂnesses. Total earnings of all Swiss banks should rise at a rate only slightly lower than that of 2005.