How Swiss stock exchange trading in 2018 affected banks’ revenues

How Swiss stock exchange trading in 2018 affected banks’ revenues

02 February 2019

The Swiss stock exchange trading volume was higher in 2018 comparing to 2017. Many segments enjoyed a bit better year, expect for ETFs. However, turbulent stock markets over the course of the whole year vastly affected the private banking sector’s revenues and assets under management figures.

Swiss stock exchange in 2018

Trading volume of the Swiss Stock Exchange in 2018 was a bit higher than in 2017 – it increased by 1 percent to CHF1.36 trillion. There were 12 new initial public offering on the SIX Swiss Exchange, which is the biggest number since 2001. Shares of trade of SIX in biggest Swiss stock went up to 70 percent from 68 percent. The only segment that has narrowed was exchange traded funds’ one. The trading volume of ETFs dropped by 14 percent to CHF100 billion in 2018. It is worth to notice though that the previous year, 2017, was a record one when it comes to ETFs trading volume.

Turbulent times

Even though end-year figures for stock exchange showed progress, things were not so rosy throughout the year. Stock markets were very turbulent, going through various ups and downs. It has a huge impact on private bank’s clients approach. Clients become more careful – even more than in times of the financial crisis in 2008. Investors held back from trading and activity was slowing down. Wealthy clients refrained from putting their CHF or EUR for investment in any assets, also in stocks. Instead of investing in stock, they preferred to hold cash. It has direct result on private bank’s revenue that are in part generated by fees charged on trading done by clients. Additionally, shares’ prices dropped significantly during the year around the whole globe. This meant value of assets managed by banks went down.

Euro Swiss Franc rate impact

Also the Swiss Franc exchange rates got lower towards the end of the year. The biggest influence on the Euro Franc rate can be credited to the weak euro that undergoes hard time due to the expansive monetary policy of the European Central Bank and the turbulences around Brexit. The good Euro Franc exchange rates was a blessing for all that want to exchange Francs into Euro like for example the Swiss Frontalier working in Geneva and other regions close to France. On the other hand the low EUR CHF rate hat a hit on the Swiss export industries profitability.

Private bank’s wealth management

All of the above can clearly be observed when looking at some of private banks wealth management data. So far we have known only figures for the first half a year as the second half data will published later in 2019. And this reports on banks’ assets in H1 2018 are not optimist ones, even in cases of conservative companies. Lombard Odier’s from Geneva assets under management stalled in the first half of 2018 due to market environment that declined growth options. The same troubles hit Pictet, a local peer of Lombard Odier, as its assets under management managed to grow only by 0,6 percent in H1 2018. The same nonsignificant growth took place at Credit Suisse international wealth management division – assets under management increased by 0,4 percent. Even though net money growth was quite good – it went up 5 percent in Jan.-Sept. 2018 period. Good effect of net money growth was erased by bad market conditions. A bit better situation was in UBS’s global management branch, where assets under management increased by 2,1 percent despite not-so-splendid net new money growth of 1,8 percent in the first three quarters of the last year.

2019 outlook

Figures for 2018 in terms of assets under management in Swiss private banking sector clearly indicate that it will be hard for banks to record growth. Even cutting costs might not lead them anywhere as the outlook for global economy is looking bleak. The worsening conditions globally will continue to hurt worth of assets under management in private banks across the country in 2019.

If you are going to change Euros or to change francs you should look for the best Euro Franc exchange rates. For this you can use our online Euro Franc currency converter and find the best euro Franc exchange rate.