Assets under management
Assets under management by banks in Switzerland fell sharply year-on-year, down 11.2% to CHF 7,846.8 bn at the end of 2022, reflecting the negative performance of the equity markets.
Assets under management for customers resident in Switzerland were down by CHF 445.3 bn, while assets under management for foreign-domiciled customers dropped by as much as CHF 541.1 bn. This translated into a sharp decline of 11.2% in total assets under management at Swiss banks, driven mainly by a marked decrease of 13.9% in securities holdings. Since the latter make up around 87% of total assets under management, the downward trends in fiduciary liabilities and amounts due to customers excluding sight deposits had no substantial impact on the overall result. The breakdown of custody account holdings by currency did not change relative to the prior year. The Swiss franc remained the dominant investment currency with a share of more than 50%. Assets under management had grown progressively overall since 2012, before dropping back in 2022.
TRENDS IN 2023
Assets under management up after first half year
Trends in 2022
Assets under management for domestic and foreign customers
Assets under management at banks in Switzerland fell substantially in 2022 to stand at CHF 7,846.8 bn, down 11.2%, leaving them back where they were in 2019/20. Assets of both domestic and foreign customers dropped, mainly as a result of a sharp decrease in securities holdings in customers’ custody accounts at banks.
Assets under management comprise securities holdings in bank custody accounts (CHF 6,837.1 bn), amounts due to customers excluding sight deposits (CHF 807.8 bn) and fiduciary liabilities (CHF 202 bn). Securities holdings were around CHF 1,100.8 bn lower year-on-year, largely as a result of the negative market performance. The Swiss Market Index (SMI) lost around 17% in 2022. Fiduciary liabilities, meanwhile, rose by 80.9%, and amounts due to customers excluding sight deposits were up 3.1%. Securities holdings account for the largest share of assets under management by far, so their sharp decline outweighed the positive trend in the other components. Looking back over the longer term, assets under management at banks in Switzerland have grown substantially overall. When the financial and economic crisis broke out in 2008, it caused a slump in assets under management. Securities holdings in bank custody accounts suffered particularly heavy losses as share prices plummeted. Between 2012 and 2021, however, assets under management clawed their way back from CHF 5,795.4 bn to CHF 8,830.3 bn, before dropping to CHF 7,846.8 bn in 2022 as a consequence of the negative market performance. The proportion of assets under management attributable to foreign customers fell from 52.3% in 2012 to 46.4% in 2022. There are a number of reasons for this, the main one being currency effects. Foreign customers hold a much higher proportion of their assets in euros and US dollars than domestic customers, but the percentages shown here are calculated in Swiss francs. The firming franc is causing assets held by foreign customers to lose value compared with those of their domestic counterparts. Despite their declining share, foreign customers’ assets under management rose by CHF 612.1 bn or 20.2% in absolute terms over the same period. Switzerland was still the world leader in cross-border wealth management for private clients in 2022, with holdings of CHF 2,249.3 bn, a decrease of 6.1% year-on-year.
Securities holdings account for the largest share of assets under management. Geopolitical uncertainty and a more restrictive monetary policy on the part of central banks in response to higher inflation led to falling share prices in many parts of the world. This prompted a sharp drop of 13.9% in securities holdings.
Securities holdings in bank custody accounts fell sharply (by 13.9%) in 2022. The main reasons for the sharp year-on-year decline are likely to be the geopolitical insecurity surrounding the war in Ukraine, high infla-tion rates around the world, and the central banks’ consequently more restrictive monetary policy. The SMI fell back by 2,100 points (16.7%) over the course of 2022, while the MSCI World Index shed 17.7%. As the year progressed, the franc gained 5.0% against the euro but lost approximately 1.5% against the US dollar. Securities holdings are broken down into the categories “equities”, “units in collective investment schemes”, “bonds” and “other”. Equities performed worst year-on-year, down 20.9%, followed by units in collective investment schemes, which lost 11.8%, and bonds, down 7.9%. Despite a sharp drop in 2022, securities holdings have recorded strong growth overall since 2012, increasing in value by 41.2%. Since bond holdings decreased during this time, the growth can be attributed to increased holdings of equities and units in collective investment schemes.
Custody account holdings by currency
The breakdown of custody account holdings by currency was stable relative to 2021, with more than half denominated in Swiss francs at the end of 2022. A quarter were in US dollars, with the remainder, just under a quarter, in euros and other currencies.
The proportion of holdings denominated in Swiss francs crept up from 53.0% to 53.2% in 2022, with the franc therefore remaining the leading investment currency in Switzerland. Only minor changes were observed in the other currencies. The proportion held in US dollars, for example, rose by 0.4 of a percent-age point year-on-year, while the proportion held in euros decreased by 0.5 of a percentage point. Domestic custody account holders were responsible for around two thirds of holdings in Swiss francs but just one third of holdings in US dollars and euros, with foreign customers making up the remaining two thirds.
Assets under management up after first half year
Following a sharp fall in 2022, assets under management rebounded by 5.5% in the first months of 2023 thanks to 5.3% growth in securities holdings, which was mainly prompted by the positive trend on the stock markets.
The slight improvement in the inflation outlook and the recovery of the equity markets in the first months of 2023 were also reflected in assets under management at banks in Switzerland, which stood at CHF 8,281 bn at the end of May, an increase of 5.5%. The assets of both Swiss-domiciled and foreign-domiciled customers grew thanks to the upbeat stock market trend and the resulting expansion of securities holdings, which rose by CHF 363 bn or 5.3%. Amounts due to customers excluding sight deposits were up CHF 56 bn or 6.7% in the first months of 2023. The increase was driven by domestic cus-tomers (up CHF 63 bn or 10.4%), while foreign customers were down CHF 8 bn or 3.6%. Fiduciary liabilities, meanwhile, rose by CHF 16 bn or 7.8%. Assets under management at Swiss banks have staged a marked recovery despite the collapse of Credit Suisse in March 2023. This reflects customers’ continuing trust in the Swiss banking centre.