Mortgage business set to grow

Mortgages and other customer receivables increased by CHF 1.1 billion (+4.0 per cent) to CHF 27.6 billion. In the course of 2009 mortgage interest rates at  Migros Bank fell to historic lows: the 2-year fixed-rate mortgage fell to a record low of 1.27 per cent, the 5-year fixed-rate mortgage to 2.26 per cent and the 10-year fixed-rate mortgage to 3.15 per cent. The variable rate for mortgages also stands at a record low of 2.5 per cent. Within the space of a year, the share of fixed-rate mortgages in the portfolio increased from 54 per cent to 78 per cent.

Cautious risk policy pays off

Migros Bank's cautious risk policy proved its worth. The Bank's risk situation remains extremely positive. In the last twelve months, a net sum of only CHF 8.1 million had to be used for provision and losses. Liquidity and backing of its own funds can also be described as very solid.

Net income increased by 11.0%!

Given the declines in market interest rates, income from financial services business declined slightly by 2.9 per cent to CHF 989 million, while costs (including valuation adjustments) fell much more significantly with a reduction of 16.9 per cent. Migros Bank compiles its financial statements in accordance with customary bank accounting provisions pursuant to the Federal Banking Commission's guidelines RRV-SFBC. In place of reporting total income, it reports net income from financial services business, which is independent of market interest rates. This could be increased by an impressive 11.0 per cent to CHF 572 million. Profit increased by 14.7 per cent to CHF 138 million in the year under review, despite one-time exceptional costs of CHF 28 million for the introduction of a new IT-platform.

More branches, more employees

In light of the positive trend in customer business and expansion of the branch network, Migros Bank also took on new hires last year. The number of employees increased by 4.9 per cent to 1,493. The number of apprentices stands at 96.

Migros Bank's branch expansion, with the planned opening of 20 branches within three years, is progressing well. 2009 saw four new branches (Brugg, Frauenfeld, Locarno and Zofingen) go into operation. Since 14 January 2010, Migros Bank is also present in Wohlen AG, taking the number of branches to 57. This year, five further openings are planned: in Martigny (on 26 March 2010), Bulle, Genève-La Praille, La Chaux-de-Fonds and Wädenswil.

Successful launch of new IT platform

On 3 November 2009, Migros Bank successfully launched a new IT platform, allowing it to tailor its offerings even more closely to customer needs and to further increase efficiency. The new platform will generate sizeable savings in IT expenses, with expected annual savings amounting to tens of millions. The total investment in the project came to over CHF 100 million.

Climate protection targets in focus till 2012

Since 2002, Migros has been working with the Energy Agency for the Economy (EnAW) and drawn up target agreements, approved by the Federal Government, aimed at increasing energy efficiency and reducing CO2 emissions. Migros Bank's headquarters also has energy and climate protection targets up to the end of 2012.

100 % sustainable with the Mi-Fonds

In August 2009, Migros Bank launched the Mi-Fonds (CH) 45 Sustainable – a new investment fund operating according to ethical, ecological and social principles. Sustainability analysis and portfolio management are carried out in collaboration with Bank Sarasin, which has 20 years' experience in sustainable company analysis.

Outlook: Focus on long-term customer benefit

In spite of the persistently strained situation on financial markets, Migros Bank can look to the future with optimism. Market recovery is likely to lead to an improvement in commission income. Migros Bank views the outlook for fiscal 2010 as positive. Thanks to the strong basis of trust among its customers and the opening of new branches, the conditions are good for winning additional market shares in the coming years. Given the uncertainties and general interest risks, Migros Bank continues to pursue a conservative growth strategy. At Migros Bank too, the focus is on long-term customer benefit.