2023-08-23 19:39:06
The National Bank’s interest rate policy drives profits: Raiffeisen Bank branch in Zurich.
Foto: Gaëtan Bally (Keystone)
Business is great at the banks. Raiffeisen returns on Wednesday announced a half-year profit of more than 700 million Swiss francs, a quarter more than last year; at the Migros Bank it is 166 million francs on the same day. Compared to 2022, the increase is 27 percent. The situation is similar for many cantonal banks.
One reason for this is the inertia of savers. Because they remain loyal to their house bank, although they would have better conditions with the competition. Another reason: There is little competition between the banks. No institute takes on the role of price breaker in order to attract new customers.
why? The profits of the financial institutions also increase in this way. Because they are currently benefiting from a special effect: the Swiss National Bank (SNB) pays commercial banks interest on the money they park with it. This can be up to 1.75 percent.
If the banks pay the savers a lower interest rate, their margin increases. This is currently the case in many places. According to the Swiss National Bank, the average savings rate for adults is currently just 0.5 percent.
And that pays off. According to Raiffeisen, the interest margin has developed extremely positively. It is currently 1.1 percent, the highest it has been in years. Just to add that this is a snapshot. Because the interest on savings would rise and the margin would decrease, which would also reduce the bank’s profits.
The banks also defend themselves with the argument that they finance part of the fixed-rate mortgages with savings. They therefore make sure that interest on savings does not grow too quickly, as their interest income from mortgages only increases slowly.
Customers distribute their money across several banks. This protection costs money – and that pleases the banks.
This is frustrating for savers: interest rates are slowly rising, but the fees introduced in recent years because of negative interest rates are hardly falling. Price monitor Stefan Meierhans recently told this newspaper: “If the National Bank raises the key interest rate, the banks are very quick to adjust upwards, for example with mortgages. Until the fees are lowered once more, it will be much slower.”
It would be time to abolish the fees once more. They were introduced by the banks with the argument that they would lose income because of the negative interest rates. Now, thanks to rising interest rates, they’re making a lot of money.
But here, too, the behavior of many customers plays into the hands of the banks. Because the end of Credit Suisse has resulted in a new trend: customers distribute their money across several banks. The thinking behind it: If one of the banks gets into trouble, at least part of the savings is safe with the competitor. This insurance costs money. Because if you spread your savings across several banks, you pay basic fees for account management in several places – and that makes the banks happy too. After all, it drives their profits.
The only thing left for customers is frustration.
Found a bug? Report now.
1692854859
#banks #making #fortune #helping #comment
– Banks earn a fortune – and we help them with that
Interest on savings is low and bank fees are high. That makes the banks’ profits bubble up. We savers are also to blame for this: we make it far too easy for them.