Swiss Banks See Further Increase in Earnings and Assets Under Management, According to SBA Report

10 October 2006 - Basel, Switzerland

According to the latest report from the Swiss Bankers Association (SBA), total earnings for Swiss banks are expected to increase throughout the remainder of 2006, led by solid growth in asset management. This surge is being fueled by positive investor senti­ment, gains in the equity markets and an overall strong economy, which has had an impact on asset management operations and trading business at Swiss banks. The “Banking Barometer” survey is commissioned annually by the SBA and is a report on economic trends in the Swiss banking indus­try.

Key findings of “Banking Barometer 2006” include:

Earnings Growth

Earnings increased by 17 percent in 2005 with assets under management (AUM) grow­ing 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 – 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 domes­tic 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 per­form 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 busi­nesses. Total earnings of all Swiss banks should rise at a rate only slightly lower than that of 2005.

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