Financial Services

Migros Bank posted excellent results for fiscal 2010. EBIT, which grew by 28% on the same period of the previous year, resulted from good income growth, as well as significantly lower costs.

in CHF million20102009Change in %
Net revenue from goods and services sold3.73.48.8
Income from financial services960.2989.4–3.0
Other operating income3.50.1n.a.
Total income967.4992.9–2.6
Earnings before finance income, income tax and pension plan effect (EBIT)277.5216.728.1
Segment assets33'663.632'607.8 
Investments in long-term assets31.576.8 


Hesitant recovery in financial markets
Major uncertainty persisted on global capital markets in the year under review mainly because of strongly rising national debt levels. The exceptionally expansive monetary policy of central banks and fresh fears of a possible deflationary development drove interest markets to historic lows. In parallel, Migros Bank's mortgage interest rates dropped to an all-time low over the course of the year. The 2-year fixed-rate mortgage fell to 1.1%, the 5-year fixed-rate mortgage to 1.71% and the 10-year fixed-rate mortgage to 2.35%.

The key stock indices closed 2010 slightly up. The Swiss Performance Index (SPI) rose by 2.9%. But for Swiss investors in foreign stocks and bonds, the strong franc had a negative impact. The euro lost 15.8% compared to the franc, and the US dollar fell 9.8%.

Highest income in company history
Migros Bank continued on its successful growth trajectory in fiscal 2010. The following information from Migros Bank's annual financial statements complies with the accounting regulations common for banks in accordance with RRV-FINMA and therefore state net income from financial services, which is independent of market interest rates, instead of total income. It rose by 3.7% to CHF 593 million, reaching its highest level in company history. Migros Bank managed to cut costs significantly; in particular, thanks to the new IT platform launched in November 2009. Material expenditure dropped accordingly by 27.5% or CHF 41 million. Total business expenses fell by 12.5% to CHF 278 million. Due to the positive income performance and significantly lower costs, Migros Bank posted a strong increase in its gross profit of 23.9% to CHF 315 million. Earnings before financial income, income tax and pension plan effect (EBIT) rose by 28.1% to CHF 278 million.

Pleasant mortgage business
Boosted by the solid economic performance in Switzerland, mortgage lending rose by 4.4% or CHF 1.1 billion to CHF 26.1 billion. The private loans price offensive launched in spring 2010 resulted in a remarkable volume increase of 40% to CHF 805 million. Client funds rose by 1.9% to CHF 26 billion and client deposits by 2.2% to CHF 11.3 billion. Interest gains posted a solid increase of 3.4% to CHF 474 million.

Tried and tested risk policy
Migros Bank's risk situation again presented itself as very good. For provisions and losses, only CHF 3.4 million had to be put aside in 2010 (2009: CHF 8.1 million). In particular, mortgage lending was consistently maintained at the previously cautious guidelines. The refinancing structure and equity capital remain very stable.

Even closer to clients
Since embarking on its branch expansion in 2008, Migros Bank has opened 14 new branches, with Genève-La Praille, Martigny and Wohlen being added last year. The number of locations rose by the end of 2010 to 59. In 2011 five new branches will be added in Bulle, Burgdorf, La Chaux-de-Fonds, Lenzburg and Wädenswil. The workforce rose by 2.9% to 1'537. Migros Bank employed 77 apprentices as of the end of the year.

Outlook: Positive assessment of further developments
Migros Bank views the outlook for fiscal 2011 as positive. Thanks to the solid basis of trust among its clients, its stronger sales power thanks to the new branches and effective cost management, the conditions are in place to gain further market shares even in the event of stronger competition.