Financial outlook for 2018

Raiffeisen currently expects Switzerland's gross domestic product to grow 2.1% in 2018 after expanding 1.0% in 2017. This should accelerate the economic recovery. Interest rates are expected to remain negative, although interest rate normalisation is anticipated over the medium term. Property prices should stabilise at a high level as brisk construction activity in recent years has narrowed the gap between supply and demand. Demand has also been stifled by the current price level and regulatory measures. The Swiss banking market is expected to continue to be impacted by pressure on margins and fiercer competition.

Raiffeisen expects volume and income in the core business to grow in 2018, despite the ongoing challenges presented by the market environment. Loans to clients and client deposits are expected to grow a bit more slowly than in 2017. Due to margin erosion and low interest rates, higher volumes will translate into only marginally higher income in the rates business. In the neutral business, income is expected to increase in the commission and services business and in trading due to growth initiatives. The Raiffeisen Group's profit in 2018 is expected to be lower than in 2017, partly due to large one-time positive effects in 2017 (sale proceeds from participations), and partly because the core banking systems at the Raiffeisen banks and at Notenstein La Roche Private Bank Ltd will start to be amortised in 2018.