|CHF million||2016||2015||Change compared to previous year|
|Net revenue from goods and services sold||3||3||13.2%|
|Income from financial services business||817||861||-5.0%|
|Other operating income||6||1||717.4%|
|Earnings before interest and taxes (EBIT)||270||284||-4.9%|
|Investments in long-term assets||23||17|
Migros Bank continued expand its core activities in 2016. In the investments business, for example, it managed to increase the number of asset management mandates by 10.9%, despite the difficult trading environment. Customer deposits also saw an increase, rising by 1.3% to CHF 33.5 billion. The shift from certificates of deposit to account deposits continued. The latter were down by 12.0%, while the number of private and premium accounts, for example, increased by 8.5%.
Cautious lending policy maintained
Mortgage lending was up to CHF 34.2 billion. This corresponds to an increase of 1.9% and is just below the overall market growth rate. In a highly competitive environment, Migros Bank, as Switzerland's fifth largest mortgage lender, firmly maintained its cautious lending policy. On the balance sheet date, 97.3% of the portfolio of mortgages on residential properties consisted of first priority mortgages with a loan-to-value rate of up to 67.0%.
Receivables from private lending amounted to CHF 1.1 billion (-6.2%). As a result, Migros Bank continued to be Switzerland's third biggest consumer lender in the reporting year.
Drop in interest income, rise in commission income
Due to slightly higher adjustments for loans, net interest income fell by 3.0% to CHF 446 million. Despite this, the cost of risk still amounted to less than 0.5‰ of the total lending volume. Commission income increased by 1.6% to CHF 89 million, while trading income was down in comparison with 2015.
Foreign currency transactions were unusually high after the Swiss National Bank's decision to abandon the euro cap in 2015. The situation on the currency markets normalised in 2016 and trading income decreased by 13.5% to CHF 34 million. Operating income fell by 3.1% to CHF 575 million.
Personnel costs and material expenses rose by 1.5% and 0.3% respectively, due to expansion of core activities. Total operating expenses were down by 1.0% to CHF 279 million. As a result of strict cost management, the cost/income ratio remained low at 47.2% and was just slightly above the previous year's level of 46.8%.
After taking into account depreciation, provisions and losses, operating income and profit amounted to CHF 266 million. This corresponds to a decrease of 7.5%, attributable mainly to the decline in interest and trading income.
In 2016, extraordinary income of almost CHF 7 million was generated, a large portion of which came from the sale of a property in Lucerne. As a whole, Migros Bank's profit came in at CHF 215 million (-5.2%).
Expansion of the investment and corporate client business
In 2016, Migros Bank decided to introduce a new, leaner organisational structure, which came into effect at the beginning of 2017. One of the main aims of the reorganisation is to make the sales management more efficient in order to be able to respond quickly to market changes and evolving customer requirements.
The new corporate structure also mirrors the ongoing expansion of the investment and corporate client business. For instance, in the reporting year various measures were taken to strengthen corporate client business in five promising areas: investment goods leasing, real estate services, health sector, closer collaboration with the Migros Group and its partners, and possible entry into the start-up market. A reduction in personnel costs was specifically not an objective of the new organisational structure.
Further expansion of the branch network
In the reporting year, the 67th branch was opened in Meyrin-Vernier. The number of full-time positions stood at 1'327 by the end of the reporting year (previous year: 1'334).
Sustainable development thanks to lower risks
For Migros Bank, sustainable actions mean, above all, adopting a responsible, consistent and prudent risk policy without investment banking. This approach not only supports the company's long-term success but is also in the interests of the lender and helps to prevent misallocation of macroeconomic resources.
Migros Bank finances the Migros Group's Engagement Migros development fund with an annual contribution of 10% of the dividends paid to the owners.