Banking Sector: Stronger Growth In 2013
BMI View: The Swiss banking sector weathered the turmoil in the nearby eurozone in 2012 and is now set to post stronger growth in 2013. A recovery in domestic demand and improvement in the global economic backdrop support our relatively more optimistic assessment for the industry this year. We forecast total industry assets to expand by 3.5% in 2013 and 4.2% in 2014.
The escalation in the eurozone sovereign debt crisis in 2013 proved a testing time for the Swiss banking sector as a result of heightened economic uncertainty and exposure to European assets. However, with the crisis lurching from an acute to a more chronic phase, the pressure on Swiss banks will ease. The improvement in financial stability and recovery in domestic and global growth will underpin a stronger expansion in industry assets in 2013.
According to the latest data provided by the Swiss National Bank (SNB) total bank assets contracted by 0.3% in January compared to the same month a year earlier. This marks the first negative year-on-year reading since August 2011 and follows six months of slowing growth. However, as the chart below shows, in nominal terms industry assets continue to edge higher on a monthly basis which bodes well for the remainder of the year. A breakdown of the aggregate bank balance sheet data reveals that the total stock of outstanding loans, which account for around 20% of total assets, actually increased by 7.6% y-o-y in January. Similarly, the value of bond holdings increased by 6.5% in the same month. The deterioration in the headline asset reading can be partly explained by the fall in 'other assets' and money market instruments.
|A More Optimistic Assessment For 2013|
|Switzerland - Banking Sector Assets|