Financial Services
Migros Bank continued on its growth course in 2011. In a challenging environment, its mortgage volume and client deposits increased significantly.
| in CHF million | 2011 | 2010 | Change in % |
| Net revenue from goods and services sold | 3.6 | 3.7 | –2.7 |
| Income from financial services | 965.3 | 960.2 | 0.5 |
| Other operating income | 2.5 | 3.5 | –28.6 |
| Total income | 971.4 | 967.4 | 0.4 |
| Earnings before finance income, income tax and pension plan effect (EBIT) | 291.4 | 277.5 | 5.0 |
| Segment assets | 35'784.7 | 33'663.6 | |
| Investments in long-term assets | 22.0 | 31.5 | |
| Employees | 1'570 | 1'537 |
Turbulence in financial markets
The economic upswing was only short-lived. Emanating from the debt crisis in southern Europe, major turbulence was seen in capital markets in the second half of the year. Switzerland, as a safe haven, felt this in the form of a further strong appreciation of the franc, in particular, which nearly reached parity with the euro during August. Due to the acute threat which this appreciation represented for the domestic economy, the Swiss National Bank set a floor of CHF 1.20 to the euro on 6 September.
Swiss government bonds were in strong demand due to their top-rate security. Accordingly, the yield on ten-year Swiss government bonds fell to an all-time low of 0.66%. At the same time, Migros Bank's mortgage rates also dropped to historic lows. Stock indices, which had slumped dramatically in late summer, managed to regain their losses by the end of the year. The Swiss Performance Index (SPI) posted a fall of 7.7% in 2011.
Solid growth for mortgages and client deposits
Migros Bank's mortgage lending grew by 5.9% to CHF 27.6 billion in the period under review. The volume of private loans rose by 28% to CHF 1'030 million due to the clear price leadership. Pleasing growth of 5.6% to CHF 27.4 billion was also achieved for client deposits. Client deposit values fell, in particular due to the negative price performance of equities, by 5.6% to CHF 10.7 billion.
Consistent earnings
The following information from Migros Bank's income statement complies with the accounting regulations common for banks in accordance with RRV-FINMA and shows net income from financial services, which is independent of market interest rates, instead of total income. Total operating income hit CHF 591 million in 2011 and was therefore 0.4% down on the previous year. Despite the extremely low interest rates and the intensive price competition, in particular for mortgages, interest income posted only a minor fall of 1.7% to CHF 466 million. Commission income rose by 3.2% to CHF 76 million. Trading income dropped by 4.8% to CHF 38 million as a result of market-related valuation corrections on proprietary equity portfolios.
Successful cost management
Thanks to a disciplined spending policy, business expenses fell by 1.9% to CHF 273 million. Due to the savings in IT, material expenditure was reduced by 6.9% to CHF 100 million. Personnel costs rose by 1.2% to CHF 173 million. The workforce rose by 2.1% to 1570, 63 of whom were apprentices. Migros bank's gross profit rose by 1.0% to CHF 318 million in the 2011 financial year.
Cautious risk policy pays off
The risk situation of Migros Bank again presented itself as very favourable. Only CHF 11.6 million net had to be put aside for provisions and losses in 2011. In particular, mortgage lending was consistently maintained at the previously cautious guidelines. The refinancing structure and equity capital are very solid.
Number of branches increased
Since launching its branch expansion in 2008, Migros Bank has opened 19 new locations, with sites in Bulle, Burgdorf, La Chaux-de-Fonds, Lenzburg and Wädenswil being added last year. As such, the current number of branches stands at 64.
Targets and outlook
Migros Bank views the outlook for the 2012 financial year as cautiously positive. Thanks to the strong basis of trust amongst clients, its traditionally conservative risk policy and efficient cost management, Migros Bank is well placed to win further market shares even in the event of lower growth and continued intensive price competition.