Switzerland's cooperative Raiffeisen Bank reported double-digit profit growth in the first half as all of its units contributed. It benefitted greatly from increased interest rates.
The cooperatively organized Raiffeisen Group significantly increased both its business performance and its profit in the first half of 2023, booking a profit of 701 million Swiss francs ($797.6 million), a 26 percent increase from the same period last year, according to results released Wednesday (in German). Operating profit rose by 271.2 million francs to 894.0 million francs.
Operating income grew by 20.9 percent to two billion Swiss francs in the first half of the year due in particular to the interest business, the Group's main income pillar. It reported an increase of 25 percent of 307.5 million Swiss francs from the same period of the previous year. The main driver of this development was the interest rate turnaround initiated by the Swiss National Bank (SNB), according to Raiffeisen.
Income from commission and service fee activities rose by 11 million francs, a 3.7 percent increase to 310.9 million francs. Net trading income increased by 17 million francs, up 14.6 percent to 133 million francs.
A «Very Good» First Half
«The key financial figures for the first half of 2023 are very good. The Group has grown in all income areas. More than 90 percent of the profit remains within the company, making us a stable and secure bank. We continue to invest in our strategic development by expanding our proximity to customers,» said CEO Heinz Huber of the results.
Overall, the Group added more than 26,700 new customers in the first six months. The number of cooperative members rose by 35,000, helped by the spin-off of Raiffeisen Switzerland's last two branches in Basel and Zurich at the beginning of the year.
Assets Under Management Rise
Through the first six months of the year, Raiffeisen attracted 1.8 billion francs of new client money, with assets under management rising to 246.7 billion, from 242.2 billion at the end of last year. Within the first six months of the year, 16,600 custody accounts were opened. The growth in asset management mandates was particularly strong. The number increased by 15.6 percent and the volume rose by 16.9 percent.
The market environment remains challenging due to the increasing risk of recession and ongoing geopolitical uncertainty. But Switzerland is more resilient and less affected by the globally subdued economic environment and inflation than other countries. The bank expects one more rate hike could be in the cards from the SNB, but unlikely to rise further after that. Still, a certain degree of interest rate volatility in the uncertain economic environment is to be expected.
Keeping Profits in-House
More than 90 percent of Raiffeisen's profits remain in the company as reserves, resulting in an «excellent capital base for the group,» and making it secure and stable. It said its favorable first half allows it to increase reserves for general banking risks by 50 million francs.
Despite higher costs, which the bank expected due to higher personnel requirements, investments, strategy implementation, and expenses for customer events, general meetings, or member events, its cost-income ratio narrowed to 50.6 percent from 57.2 percent.
