Banks in Switzerland forecast record results for the 2023 financial year, with the majority also optimistic about future years.

According to the Banking Barometer 2024, published by consulting firm EY on Thursday, a total of 96% of Swiss banks forecast a considerably improved operating business performance for the 2023 financial year compared to the year before.

“High-interest rates, low-value adjustments and the resilient Swiss economy will lead to record results for the banks surveyed in 2023,” according to Patrick Schwaller, managing partner at Audit Financial Services.

Furthermore, the study reveals that most banks are planning to invest the profits into bolstering their own funds and, therefore, in risk provisioning, Swiss Info reports.

This was the case for 72% of regional banks and 42% of cantonal banks.

The findings also show 38% of foreign banks and 30% of private banks are planning to invest the money mainly in the further development of their business models.

In addition, Swiss banks are also optimistic about the coming years. Over the next one to two years, 87% forecast a rise in operating profit, whilst over three or more years, just under 90% predict further growth.

The rise in profits is predominantly a result of the increase in interest rates and the accompanying higher interest margins.

Around 42% of banks forecast the interest margin to stay constant in the next one to two years, with 16% projecting an additional increase.

In contrast, two out of five banks are also predicting a decline in the interest margin as rates may soon have reached a peak.

A little over 100 private, foreign, regional and cantonal banks in Switzerland were polled in the study.

Two-thirds are based in German-speaking Switzerland and a quarter in French-speaking Switzerland, whilst 7% are from Ticino, the Swiss Info report adds.

EY has carried out this survey every year since 2010.