Based on business performance in the first quarter, Valiant Bank expects to achieve a higher full-year profit than last year. The increase in profitability in the first three months of the year was mainly down to interest income.
Valiant Bank had a first-quarter profit of 23.4 million Swiss francs, 17 percent more than in the same period of 2015, the company said in a statement today. Net interest income rose 6 percent to 70.4 million francs.
The regional bank with just over 800 employees expects a «slightly higher» full-year net than last year, based on the performance in three months through March. Still, the further decline in interest rates since the start of the year has weighed on the bank's result.
Pressure on Interest Margin
Persistently low interest rates have put further pressure on the bank's interest margin. Fixed-rate mortgages and loans to small- and medium-sized companies due to expire were renewed at much lower rates in the first quarter than in recent years, the bank added. New business was also concluded at lower rates. The operating interest margin at Valiant remained almost unchanged at 1.07 percent, despite the difficult market conditions.
Net commission and service fee income dropped 3.8 percent, while trading income added 26 percent. Valiant cut costs by 0.4 percent to 54.6 million francs. Client deposits increased 0.3 percent, reaching 18.1 billion francs, with loans up 0.5 percent to 22.2 billion.
