Financial outlook for 2019

Market environment and general conditions

The Swiss economy was on a satisfying trajectory in 2018. Gross domestic product grew around 2.5%, driven by a broadly stable Swiss economy (consumption, investment, export) and a global economy that was particularly strong during the first half of the year. As a result, 2018 was the best year for growth in Switzerland since 2010, which had a positive impact on employment, among other things. Raiffeisen expects growth to slow down to around 1.2% in 2019 as the international economy loses steam. Geopolitical uncertainty also weighs on the outlook for this year.

Raiffeisen expects negative interest rates to continue in 2019 as the European Central Bank (ECB) and the Swiss National Bank (SNB) are unlikely to make any interest rate moves in the absence of inflationary pressure. However, interest rates are anticipated to normalise through extremely moderate increases over the medium term. The tailwind from constantly falling interest rates is weakening in the real estate market. However, despite high real estate prices, property ownership remains attractive thanks to the expectation of low interest rates and high rents. In addition, supply and demand for ownership have not diverged – unlike in the investment property segment where the vacancy rate has risen to 1.6%. All in all, Raiffeisen expects slower price growth for real estate and consolidation at a high level.

Development of the Raiffeisen Group's business

The Swiss banking market will continue to be influenced by margin pressure. Raiffeisen expects volume and income in the core business to grow moderately in 2019, despite the significant challenges presented by the market environment. Raiffeisen expects loans to clients to grow at a similar pace to 2018, while client deposits are expected to once again grow faster. Income in interest operations and commission and services business should therefore increase slightly for the Raiffeisen banks and Raiffeisen Switzerland.