Balance sheet
The aggregate balance sheet total of all banks in Switzerland declined markedly (by 6.9%) in 2022, the first major fall in 10 years. The downturn among the big banks was especially large, and is probably attributable mainly to shifts in customer funds.
Banks in Switzerland recorded a sharp (6.9%) contraction in balance sheet total in 2022, down from CHF 3,587.7 bn to CHF 3,339.7 bn. On the assets side, mortgage loans remained the largest item by a considerable margin, while liquid assets dropped by a hefty 29.8%. Financial investments, meanwhile, climbed sharply and were up CHF 69.3 bn (29.8%). On the liabilities side, there was a substantial decrease of 15.6% in sight deposits last year, whereas time deposits rose sharply, up 31.1%. Despite a rotation out of sight deposits and into time deposits, amounts due in respect of customer deposits fell by 8.5% overall. There was a significant decline among the big banks, presumably due to large outflows of customer funds from Credit Suisse. The volume of domestic lending rose slightly once again, by 3.3%, thanks to a 3.7% increase in mortgage loans, which reached a new high of CHF 1,152.5 bn. Other loans, both secured and unsecured, inched up by 1.1%. As in 2021, the cantonal banks had the largest share of the domestic mortgage market (38.3%), followed by the big banks (26.1%).
Trends in 2022
Balance sheet trends by bank category
The aggregate balance sheet total of all banks in Switzerland fell by 6.9% in 2022. The big banks posted the largest year-on-year decrease in absolute terms, which was responsible for just under 80% of the total. With growth of 4.8%, the cantonal banks were one of the few categories to record an increase. The big banks once again had the largest share of the aggregate balance sheet total with 41.2% (2021: 44.0%; 2020: 45.2%).
Figure 10
Assets
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Mortgage loans remain the largest asset item, making up 35.2% of the total. Liquid assets were down by a substantial CHF 226.5 bn in 2022, and thus played a key role in the overall decline. The biggest relative increase was recorded by financial investments (up 29.8%).
Domestic and foreign mortgage loans rose by CHF 39.6 bn, from CHF 1,134.9 bn in 2021 to CHF 1,174.5 bn in 2022. They thus remained the largest asset item for banks in Switzerland last year with a share of around 35.2%, making up more than a third of the total for the first time. The strong growth in mortgage loans is due to the fact that they were rising while balance sheets were being shortened as a result of a sharp (29.8%, CHF 226.5 bn) fall in liquid assets, which are now only the third most important asset item after amounts due from customers. The sharp drop in liquid assets corresponds to a marked (28.5%) decline in banks’ sight deposits at the SNB, the biggest fall in a decade. It was prompted by the sale of foreign currencies by the SNB, the higher policy rate and the resulting increased opportunity costs of holding liquidity, along with increased liquidity requirements at Credit Suisse. Only the cantonal banks, which recorded large inflows of new money in 2022, kept their sight deposits at the SNB stable.42 All other bank categories posted a sharp decline, with the stock exchange banks in particular cutting their sight deposits by almost half compared with the previous year. Amounts due from customers fell by CHF 66.9 bn or 10.7% in 2022. One notable change is the decline in amounts due from customers abroad, which dropped by CHF 68.9 bn (15.5%). Making up 16.8% of total assets, amounts due from customers now constitute the second-largest asset item. Amounts due from other banks likewise fell sharply, by CHF 28 bn to CHF 223.9 bn, a decline of 11.1%. This was the result of a 27.5% drop in amounts due from foreign banks and a CHF 15.9 bn (17.4%) increase in amounts due from domestic banks. Amounts due from securities financing transactions declined by 5.8% in 2022, to CHF 182.7 bn. The biggest increase was in the “financial investments” asset item, up CHF 69.2 bn or 29.8% due to a big rise in domestic (up CHF 50.5 bn or 50%) and foreign financial investments (up CHF 18.7 bn or 14.2%).
Breakdown of assets over time
The breakdown of assets has changed markedly over the past decade. Liquid assets shot up from CHF 340.8 bn in 2012 to CHF 760.6 bn at the end of 2021 – despite negative interest rates. This was due to a number of factors: the SNB’s interventions to counteract the Swiss franc’s strength played a key role as the bank’s purchases of foreign currencies caused counterparties’ sight deposits denominated in Swiss francs to increase. Additionally, low interest rates made the opportunity cost of holding cash minimal, so the banks placed large quantities of it in sight deposits with the SNB. The year 2022 saw a turnaround, with the liquid assets item declining markedly for the first time. Domestic and foreign mortgage loans also grew steadily between 2012 and 2022, from CHF 847.9 bn to CHF 1,174.5 bn), thereby climbing from 30.5% of total assets at the end of 2012 to 35.2% at the end of 2022. Many years of low interest rates have led to larger numbers of properties being sold at higher prices. Amounts due from banks made up 17.9% of total assets in 2012, but by 2022 this figure had fallen to just 6.7%. One reason for this was the banks deliberately scaling back this asset item in order to reduce inter-dependencies with other institutions.
Domestic lending volume
The volume of domestic lending increased by around 3.3% in 2022. Mortgage loans, most of which are granted to private households, make up the bulk of the Swiss lending business with a share of 86.2%.
The volume of outstanding domestic loans came to CHF 1,337.1 bn in 2022, with CHF 184.6 bn attributable to secured and unsecured loans to customers (corporate, public-sector and consumer loans) and CHF 1,152.5 bn to mortgage loans. Overall domestic lending was up 3.3% over the year, a level of growth comparable to that of previous years. Total mortgage loans have increased by CHF 318.1 bn since 2012, with their share of domestic lending rising from 83.4% to 86.2%. While unsecured loans grew by CHF 3.2 bn in 2022, secured loans fell slightly by CHF 1.3 bn.
Figure 13
Total outstanding mortgage loans increased by 3.5% in 2022, to CHF 1,174.5 bn. The vast majority of this (CHF 1,152.5 bn) was attributable to domestic customers. Fixed-rate mortgages accounted for 77.0%. The average interest rate on outstanding domestic mortgage loans has risen from 1.17% to 1.33% in 2022.43 Mortgages with a term of more than five years have become more popular over time, their share rising from just 19.3% in 2012 to 27.1% by 2022. In terms of volume, 59.2% of all new mortgages were granted to private households at the end of 2022. In the fourth quarter of 2021 that figure stood at 66.7%. The decline in the proportion of new mortgages for owner-occupied properties in 2022 compared with 2021 is especially marked. The cantonal banks’ overall share of the domestic mortgage loan market was 38.3% at the end of 2022, roughly in line with the year-back figure. They were followed by the big banks with 26.1%. In recent years, the cantonal and Raiffeisen banks in particular have increased their shares of the domestic mortgage loan market, whereas the big banks and the regional and savings banks have lost market share. Broken down by lending group, 93% of domestic mortgage loans were categorised as senior in 2022. This group comprises mortgages covering up to two thirds of the property’s market value. No relevant differences between the various bank categories were discernible. The high share of senior mortgages probably indicates that mortgage lenders are continuing to pursue cautious lending policies. The SBA revised its Guidelines on minimum requirements for mortgage loans in 2019, introducing stricter rules for investment properties.44
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Liabilities
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In 2022, amounts due in respect of customer deposits accounted for more than half of all liabilities. There was an increase in time deposits compared with the previous year, while sight and other customer deposit and trading portfolio liabilities were lower.
The balance sheet item “amounts due in respect of customer deposits” – comprising sight deposits, time deposits and other customer deposit liabilities – fell by CHF 176.3 bn or 8.5% in 2022. This item made up 56.5% of the balance sheet total at the end of last year. The decline is due to a sharp drop in sight deposits (down 15.6%) and other customer deposit liabilities (down 10.1%), and the strong growth of CHF 78.1 bn (31.1%) in time deposits was not sufficient to cancel it out. The fall in sight deposits is only partially attributable to a rotation into time deposits. Much of it was due to outflows of customer funds from Credit Suisse in October 2022. Some of these probably ended up with other bank categories: the cantonal, Raiffeisen, regional and savings banks all recorded a rise in sight deposits in 2022, despite the opportunity costs. Amounts due to banks fell by CHF 5.2 bn in 2022, mainly due to a CHF 27.6 bn fall in amounts due to foreign banks. Amounts due to domestic banks grew by around CHF 22.4 bn. Trading portfolio liabilities were CHF 0.8 bn lower at CHF 31.2 bn, while bond issues, central mortgage institution loans and cash bonds were down by CHF 25.8 bn. The decline is primarily the result of a CHF 22.9 bn drop in bond issues and central mortgage institution loans abroad. Domestic bond issues and central mortgage institution loans fell by a much smaller CHF 3.0 bn, while the big banks were predominantly responsible for the drop in the foreign figure. Only the cantonal and big banks hold foreign bond issues and central mortgage institution loans.
Breakdown of liabilities over time
The proportion of liabilities accounted for by amounts due to banks fell from 15.8% in 2012 to 12.3% in 2022. As with the assets side, this shows that interbank business, particularly with banks in Switzerland, has declined over time. During the same period, sight deposits rose from CHF 725.8 bn to CHF 1,080.7 bn. They constituted the largest liability item by far at the end of 2022, with a 32.4% share. In 2022, time deposits accounted for 9.9%, a similar level to 2012, having been well below 10% for most of the intervening years. Low interest rates made time deposits less attractive than sight deposits, leading to a rotation out of the former and into the latter. The situation reversed in 2022 as a result of the interest rate turnaround, with funds flooding back into time deposits.
Balance sheet total remains unchanged in first half of 2023
The aggregate balance sheet total remained largely unchanged in the first months of 2023, rising just 0.2%. On the assets side, amounts due from customers along with trading portfolios in securities and precious metals declined, while liquid assets and amounts due from banks rose. On the liabilities side, there was an especially sharp fall in amounts due in respect of customer deposits, while amounts due to banks rose.
The aggregate balance sheet total of the banks in Switzerland remained essentially constant at CHF 3,471.8 bn in the first five months of 2023, an increase of just 0.2%. The big banks’ balance sheet totals fell, while those of the cantonal and Raiffeisen banks rose, most likely because of shifts in customer funds at Credit Suisse. In 2022, the decrease in the balance sheet total on the assets side was largely attributable to a sharp drop in liquid assets as well as amounts due from banks and customers, while financial investments grew strongly. Liquid assets (up CHF 31 bn or 5.7%) and amounts due from banks (up CHF 25 bn or 9.4%) rose in the first months of 2023. The growth in liquid assets is probably partly the result of higher liquidity requirements at Credit Suisse. Trading portfolios in securities and precious metals (down CHF 13 bn or 8.2%) and amounts due from customers (down CHF 25 bn or 4.4%) recorded sharp falls. Mortgage loans climbed once again in the first months of 2023, increasing by CHF 14 bn or 1.2%. Demand for real estate has dropped in response to higher interest rates, but shortage of supply and a very low level of construction activity are supporting prices.
The decrease on the liabilities side of the balance sheet is primarily attributable to amounts due in respect of customer deposits (down CHF 85 bn or 4.4%), and is a direct consequence of the shifts in customer funds at Credit Suisse, which left the big banks down CHF 67 bn or 10%. The foreign and stock exchange banks also recorded falls. Amounts due to banks, meanwhile, were up CHF 96 bn or 20.2%. The trend seen in 2022, with sight deposits declining and time deposits climbing sharply on the back of positive interest rates, continued in the first half of 2023. Time deposits were up 14.4% (CHF 49 bn), while sight deposits were down a hefty 12.8% (CHF 140 bn).
42 https://www.kantonalbank.ch/de-CH/News/2023/VSKB-Jahresabschluss-KB-2022?aliaspath=%2fNews%2f2023%2fVSKB-Jahresabschluss-KB-2022 43 https://www.bwo.admin.ch/bwo/de/home/mietrecht/referenzzinssatz/entwicklung-referenzzinssatz-und-durchschnittszinssatz.html 44 https://www.swissbanking.ch/_Resources/Persistent/0/e/3/f/0e3fe72b0bdc557fef84893287ece62b37172e4c/SBVg_Richtlinien_betreffend_Mindestanforderungen_bei_Hypothekarfinanzierungen_DE.pdf 45 Trend based on the SNB’s monthly banking statistics. 46 Sum of the categories “foreign banks”, “foreign controlled banks”, “branches of foreign banks” and “stock exchange banks”.