According to a research based on the annual reports of 94 private banks in Switzerland and conducted by KPMG and the University of St Gallen, 1 in 3 private banks is operating at a loss and return on equity (ROE) is declining at most banks.
Declining profitability and low growth in assets over the past year have negatively impacted the performance of the private banks in Switzerland. The US Program signed a year ago is another charge that weighted on the banks’ results.
According the study the impact of the US Program can be summarized as follows:
‘US tax program leads to drop in return on equity: Provisions for the US tax program came to a grand total of CHF 0.9 billion at the end of 2013. In their 2013 financial statements, 21 of the 94 private banks analyzed had created provisions for potential fines and consultancy fees while another 11 banks only created provisions to cover consultancy fees. The analysis revealed that the remaining two thirds of those banks have only created small provisions or none at all. In the near future, continued increases can be expected in terms of both provisions and expenditures’.
The highlights are reported by