Discover how Swiss private banks have reached an all-time high in assets under management, now totaling a staggering 3.4 trillion.
The Swiss private banking sector has reached a significant milestone in 2024, with assets under management soaring to a record 3.4 trillion francs. This remarkable growth reflects the resilience of Swiss private banks amidst an evolving financial landscape, according to the latest “Clarity on Swiss Private Banks” study conducted by KPMG.
Key Highlights of the 2024 Financial Performance
- Record Assets Under Management
Swiss private banks have achieved a historic high of 3.4 trillion francs in assets under management. This increase showcases the sector’s enduring appeal and the trust clients place in these institutions. - Net New Money Contributions
Although the infusion of net new money was modest at 72 billion francs, it still contributed positively to the overall growth of assets. This indicates a steady flow of investments into Swiss private banking. - Revenue Growth
Revenues within the sector rose from 20.5 billion to 21.4 billion francs. This increase is primarily attributed to higher commission and trading income, highlighting the banks’ ability to capitalize on market opportunities despite challenges in net interest income, which fell by about 10% to 4.6 billion francs. - Profit Increases
Profits after tax surged to over 4.0 billion francs, up from just under 3.1 billion in 2023. This substantial profit growth underscores the operational efficiencies and strategic adjustments made by these banks. - Rising Operating Costs
Operating costs also saw a significant rise, increasing by more than 500 million francs to approximately 15.3 billion. Personnel costs, which account for two-thirds of these expenses, played a pivotal role in this increase, reflecting the sector’s investment in talent and expertise.
Trends in the Swiss Private Banking Landscape
Declining Number of Banks
The Swiss private banking landscape is witnessing a contraction, with the number of private banks expected to drop from 85 to below 80 by the end of 2025. This trend marks a significant reduction from 156 banks just 15 years ago, highlighting the impact of acquisitions and market consolidation.
Cost/Income Ratios
The median cost/income ratio, a critical indicator of a bank’s efficiency, slightly deteriorated to 75.5%. Nearly two-thirds of the banks reported higher ratios than the previous year, with smaller institutions facing the most significant challenges. However, this figure remains historically low, suggesting that while the environment is becoming more competitive, many banks have managed to maintain operational efficiency.
Acquisitions and Industry Consolidation
The annual study by KPMG and the University of St. Gallen (HSG) analyzed 71 private banks in Switzerland, with notable players including Edmond de Rothschild, EFG, J. Safra Sarasin, Julius Baer, Lombard Odier, Pictet, UBP, and Vontobel. The “Big 8” have strategically streamlined their offerings through acquisitions and sales, notably with J. Safra Sarasin’s acquisition of Saxo Bank—the largest transaction among Swiss private banks in the past decade.
Looking Ahead: Challenges and Opportunities
As the Swiss private banking sector navigates a complex market environment, challenges such as declining interest rates and increasing operational costs are expected to persist. KPMG forecasts that these pressures will likely impact profitability in 2025. However, the ongoing consolidation and strategic adjustments made by major players may provide opportunities for growth and enhanced competitiveness.
While Swiss private banks have achieved record assets under management and profit growth in 2024, they must remain agile and responsive to the evolving financial landscape. The future of this sector will depend on its ability to innovate, adapt, and continue delivering exceptional value to clients.
