Despite negative interest rates, decreasing loan growth rates and increasing capital and liquidity requirements Swiss domestic banks have managed to achieve stable results in a challenging market environment, reporting aggregated equity returns of 5.7% in 2016. However, it will become more difficult for the banks to maintain their performance, given a high dependency on declining interest revenue pools, continued cost pressures and challenges to digitalize, and a mind-set that seems determined to grow balance sheets above the long-term market potential.
Our new report Swiss Banking 2017: Room for improvement identifies a number of future challenges for Swiss domestic banks. Although we believe that Swiss banks can maintain their current positioning, they also should pay attention to warning signs in the market and take action now to pro-actively reshape their business models.
