RAIFFEISEN – THE BANK OF SWISS CITIES

Raiffeisen, the bank traditionally preferred by the farming community, expanded again in the first half – in the cities of Switzerland. The bank's profit however took a blow.

Raiffeisen CEO Patrik Gisel had hinted at it in an interview with finews.ch: the interest income, traditionally the most important source of revenue for Switzerland's No. 3 bank, has grown substantially in the first six months of 2016.

The 270 cooperative banks of Raiffeisen Switzerland increased mortgages by 2.2 percent and clients' assets by 2.6 percent, the bank said in a statement yesterday.



Growth of interest income was above average in the cities – areas where Raiffeisen traditionally hadn't been strong.

«Raiffeisen will retain its strong position in the interest margin business,» Patrik Gisel was quoted as saying in the statement. «This source of income will remain the most important even in future.»

Revenue from commission was equally impressive at Raiffeisen, expanding by 3.1 percent.

But Gisel can't be all satisfied with the first half. Profit declined to 367 million Swiss francs, down 28 million from a year earlier.

The reasons for the reverse are volatile markets with their repercussions on trading income as well as investments in Raiffeisen's future, the bank said.

The regional bank has felt the international outfall of Brexit to a surprising degree, with revenue from trading down 12.5 percent due to unfavorable markets.

Meanwhile, costs increased by 5.4 percent, «substantially», as Raiffeisen readily admitted. The development of a new core banking system (working with Avaloq under the project name Rainbow) and last year's acquisition of La Roche private bank increased the number of staff by 0.3 percent to 9,315 full-time equivalents.

The cost-income-ratio rose to 63.2 percent as the bank concentrates on completing the strategic initiatives.

«Cost won't be relieved because of the ongoing development of the new core banking system,» the bank said. «Raiffeisen doesn't expect to match last year's record profit» due to the situation.

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