The German market was Vontobel's Achilles heel for a long time. Things are looking up though after the first annual profit since the founding of a unit in Munich.

Vontobel Bank in Germany has been operative for more than a decade, and not once been able to show a profit. In total, the bank made a loss in excess of 10 million euros.

Last year brought the long-sought turnaround. The Munich-based German unit posted its first-ever profit of 3.1 million euros, compared with a loss of 5.8 million a year earlier, the annual report showed.

The bank said that its strict cost discipline, the sale of high-margin products and the geographic expansion of the investment-banking activities contributed to the improvement of the German unit's annual result.

Strong Asset Growth

All three units fared better last year. Investment banking contributed 55 percent of Vontobel Germany's revenue, private banking pitched in 27 percent and asset management 18 percent, the bank said.

Client assets increased more than 300 million to 1.31 billion euros, more than the bank had hoped for, about 220 million of which came from new customers.

Vontobel is optimistic about its future development in Europe's strongest economy. It plans to extend the private-banking unit by hiring more investment advisers. Currently, the bank employs 15 client advisers in Germany.

The bank aims to increase the amount of clients by 185 million to 1.455 billion euros this year and forecast a profit of about 4 million euros.

Vontobel Wasn't a Lone Sufferer

Vontobel isn't alone in being optimistic about the German business. UBS wants to return to profitability at the latest in 2017, according to Thomas Rodermann, the bank's country boss. UBS Germany would have been profitable in 2014 if provisions for the Madoff fraud hadn't wiped out any profit.

Julius Baer is another bank to have turned from red to green – the business with private clients returned a profit in 2014.

These first signs of a turnaround in Germany are encouraging, even if the markets remains notoriously challenging for Swiss banks.

Severely Competitive Market

German wealth management may look attractive, what with the density of millionaires, but it is also severely competitive. This applies to the segment with the affluent customers in particular, where most Swiss banks have failed to make much of an impression recently.

Julius Baer, Sarasin, Vontobel, St. Galler Kantonalbank, UBS and Credit Suisse together lost several hundred million euros in Germany since 2008.

There is one exception to the rule: Pictet is generating double digit million profits in Germany.