Swiss Banking Outlook
Upbeat outlook for banks
In its new Swiss Banking Outlook, the SBA outlines the expected trends in selected macroeconomic and financial market indicators and discusses topics with relevance for Swiss banking. The publication is based on the results of a survey of recognised financial market experts from SBA member institutions.
The SBA carried out its first ever survey of financial market experts on economic trends at banks in Switzerland and their views on the current hot topics this year. The Swiss Banking Outlook offers a useful overview of the outlook for the industry in terms of macroeconomic and financial market indicators as well as its general prospects for the future. It forecasts economic growth of 0.9% and an inflation rate of 2.4% for the year as a whole. A majority of the experts surveyed do not expect the Swiss National Bank (SNB) to hike interest rates beyond the current level of 1.75%. The picture looks more optimistic for 2024, with economic growth expected to reach 1.5% and falling inflation as well as a trend reversal in interest rates anticipated.
Following a drop in the Swiss banks’ net income in 2022, the Swiss Banking Outlook predicts an increase for this year, driven mainly by a higher result from interest operations. As regards mortgages, meanwhile, the majority of the experts surveyed expect higher interest rates and modest economic growth to lead to a below-average increase in 2023. Besides rising interest rates, the Swiss Banking Outlook also suggests that the future prospects of banks in Switzerland hinge on further improvements in the customer experience thanks to digital channels and on sustainable finance. Strong growth in volumes is anticipated for sustainable investments in 2023. Risks to Swiss banks’ income are seen in particular in the high cost of adapting IT systems, the increasing density of regulation and the potential fallout from damage to the Swiss financial centre’s reputation.
Economic outlook slowly improving
The Swiss Banking Outlook forecasts economic growth of 0.9% and an inflation rate of 2.4% for 2023, followed by economic growth of 1.5% and a trend reversal in interest rates in 2024.
Successful interest operations driving net income
The Swiss Banking Outlook forecasts a year-on-year increase in net income in 2023, driven mainly by a strong result from interest operations. Mortgages, meanwhile, are set to show below-average growth this year.
Digital customer experience and sustainable finance seen as key opportunities
According to the Swiss Banking Outlook, opportunities for Swiss banking over the next 12 months include the digital customer experience, sustainable finance and rising interest rates. Income risks, on the other hand, include the high cost of adapting IT systems, the increasing density of regulation and potential damage to the Swiss financial centre’s reputation.
Growth in sustainable finance continuing
Growth in sustainable finance is continuing at a strong pace. Following a temporary setback in 2022, the Swiss Banking Outlook forecasts a return to the long-term trend of high growth rates in sustainable investment volumes, driven by customer demand.