In 2024, Raiffeisen Group faces reduced profits despite a surge in mortgage loans, reflecting the impact of shifting interest rates.
In a rather sobering turn of events, the Raiffeisen Group has unveiled its financial results for 2024, revealing a notable dip in profit figures compared to the previous year. The banking institution, which stands as Switzerland’s second-largest, reported a group profit of 1.21 billion francs, reflecting a 13.1 percent decrease from the prior year’s performance. Operating profit, a critical metric for assessing the bank’s core activities, plummeted by 16.9 percent to 1.42 billion Swiss francs.
The decline in overall income, which totaled 3.90 billion francs—a 4.0 percent reduction—can be largely attributed to a significant downturn in the interest business. The bank’s net interest income fell to 2.84 billion francs, marking a 7.5 percent drop from what was described as an “extraordinarily high result” in the preceding year. However, it is worth noting that the Raiffeisen Group experienced a resurgence in its pensions and investment sectors, buoyed by substantial net new money inflows. This segment saw net commission and service income surge by 9.5 percent, reaching 625 million francs.
The corporate customer segment has also emerged as a vital component of the bank’s diversification strategy, contributing approximately 20 percent of total business income. In a commendable feat, the group successfully attracted over 5,000 new corporate clients, particularly in the wake of the seismic shifts following UBS’s acquisition of Credit Suisse.
Nevertheless, the bank’s operating expenses have also escalated, rising by 4.8 percent to 2.11 billion francs, partly due to an increase of 337 full-time positions. Consequently, the cost-to-income ratio deteriorated to 56.7 percent, compared to 51.9 percent the previous year. Additionally, the Raiffeisen Group recorded an impairment of 82.4 million francs on its investment in Leonteq, a financial firm grappling with its own challenges.
On a more optimistic note, the Raiffeisen Group has accelerated its growth in the mortgage market, with mortgage receivables climbing by 4.6 percent to 220.8 billion francs. This marks an increase from the 3.6 percent growth observed in 2023. The bank proudly asserts that it has fortified its position in the mortgage sector, raising its market share from 17.8 to 18.1 percent. Furthermore, customer deposits have also seen a significant uptick, rising by 3.4 percent to 214.9 billion francs, with the bank receiving more than double the customer deposits compared to the previous year.
Looking ahead, the Raiffeisen Group adopts a cautiously optimistic stance for 2025, anticipating a “solid business performance” that aligns with the previous year’s results. The bank posits that declining mortgage interest rates may rekindle demand for real estate, potentially reigniting price dynamics in both the owner-occupied and investment property segments. As the financial landscape continues to evolve, the Raiffeisen Group remains steadfast in its commitment to navigating these challenges while capitalizing on emerging opportunities.
