In 2021 the Raiffeisen Group generated an excellent result, with a Group profit of CHF 1.07 billion, 24.2% higher than the previous year.
Key performance indicators
|in CHF million, percent, number||2020||2021||Change in %|
|Key figures income statement|
|Gross result from interest operations||2,350||2,402||2.2|
|Result from commission business and services||451||536||18.8|
|Cost income ratio||59.4%||56.0%|
|Key balance sheet figures|
|Loans to clients||200,358||206,355||3|
|of which mortgage receivables||190,317||196,360||3.2|
|in % of loans to clients||95.0%||97.8%|
|Total equity (without minority interests)||18,444||19,179||4|
|Tier 1 ratio (going concern)||19.6%||21.7%|
|TLAC leverage ratio||7.3%||7.4%|
|Liquidity Coverage Ratio (LCR)2||159.4%||185.4%|
|Net Stable Funding Ratio (NSFR)3||141.5%||144.9%|
|Share of mortgage market||17.6%||17.6%|
|Market share of client deposits||13.8%||14.0%|
|Number of clients||3,553,190||3,606,540||1.5|
|Number of cooperative members||1,935,790||1,963,593||1.4|
|Client assets under management4||224,042||241,226||7.7|
|Net new money client assets under management||16,328||14,509||-11.1|
|Risk ratio lending business|
|Value adjustments for default risks||261||243||-7|
|as % of loans to clients||0.130%||0.118%|
|Value adjustments for expected losses (risk provisions)5||n/a||482||n/a|
|Number of employees||11,207||11,465||2.3|
|Number of full-time positions||9,492||9,729||2.5|
|Number of locations||824||820||-0.5|
|1 According to the systemic importance regime.|
|2 The liquidity-coverage-ratio (LCR) measures whether a bank has sufficient liquid funds to cover its liquidity needs from its own funds over a 30-day period in the event of an emergency. The LCR puts the available liquid funds in relation to the expected net outflow.|
|3 The net-stable-funding-ratio (NSFR) serves to ensure sustainable and stable funding of a bank's lending and off-balance-sheet activities. In particular, it limits the risk of a bank financing its lending activities with deposits that are deemed too unstable and short-term.|
|4 The client assets shown include custody account assets plus liabilities arising from client deposits and cash bonds. "Liabilities arising from client deposits" includes client deposits that are not similar to an investment. The following are not included: fiduciary deposits, custody-only relationships (third-party banks and institutional clients where Raiffeisen acts solely as custodian) and assets of institutional investors where the business activity consists of liquidity and repo investments.|
Reclassifications between assets under management and unreported assets (such as custody-only) are shown as a change in net new money.
|5 In accordance with FINMA AO, as at 1 January 2021 the Raiffeisen Group recognised value adjustments in equity for latent default risks amounting to CHF 493,2 million. The changes that occurred after the initial allocation were recognised in the income statement under "Changes in value adjustments for default risks and losses from interest operations".|
High level of customer trust – sustained strong growth in the core business
Positive trend in all income items
Higher costs due to investing in the Group strategy
Safe and with a strong capital position
Income from operating activities
The continued low interest rate environment and high competition in the mortgage business are keeping the Raiffeisen Group’s main pillar of income – interest operations – under pressure. However, active and prudent balance sheet management along with volume growth made it possible to increase the gross result from interest operations by CHF 52.3 million (+2.2%) to CHF 2.4 billion. The previous year had seen a slightly higher need for value adjustments, with risk assessment being cautious owing to the uncertain economic outlook, but the recovery in the year under review allowed a net CHF 12.1 million reversal of value adjustments for interest operations. Changes in value adjustments for default risks and losses from interest operations fell by CHF 64.6 million in the year under review, after a net increase the previous year ( note 15) Value adjustments for default risks thus remain very low compared to total loans, at 0.118% (previous year: 0.130%). The net result from interest operations climbed CHF 116.9 million (+5.1%) from the previous year to CHF 2.4 billion.
Commission business and service transactions
Commission business and service transactions put in a very encouraging performance ( note 23). Largely due to the strong securities and investment business, the result from commission business and service transactions increased CHF 85.0 million (+18.8%) to CHF 536.1 million. This strong rise meant the prior-year figure was again comfortably exceeded. The number of securities transactions was up considerably. In addition, the Group saw strong inflows in the investing and saving for retirement business, not least thanks to the favourable stock exchange environment. Volumes in fund savings plan custody accounts rose about 37% and the number of custody accounts was also up strongly by 29%. The volume of retirement custody accounts grew 39%, their number rose by 52%. For asset management mandates, both the volume and the number of new custody accounts rose by more than 120%. This strong performance underlines the Raiffeisen Group’s expertise in investing and saving for retirement. Moreover, the efforts to diversify income are working. Interest operations as a percentage of total operating income has declined in recent years, while commission business and service transactions has seen its share increase. This trend has further accelerated since the launch of the strategy implementation and year on year. The strategic initiatives to strengthen the investing and saving for retirement business as part of the implementation of the Group strategy Raiffeisen 2025 should support this trend in future too.
The Raiffeisen Group also posted a rise in the result from trading activities ( note 24). In total, the result from trading activities and the fair value option came to CHF 244.6 million. This marked an increase of CHF 29.9 million (+13.9%). The main reason was a positive performance in foreign exchange transactions. After a lower result the previous year, when travel was severely restricted due to the pandemic and fewer foreign transactions were processed, foreign exchange transactions increased again during the year under review and resulted in additional income.
Other result from ordinary activities
The other result from ordinary activities also contributed to the higher operating income, growing strongly by CHF 91.4 million (+93.8%) to CHF 188.7 million. Disposals of financial investments generated higher income. In addition, income from participations rose CHF 41.6 million from the previous year ( note 25). In particular, a substantial write-up on the participation in Leonteq AG, which is measured using the equity method, was recognised thanks to the company’s positive performance.
Personnel expenses ( note 27) increased by CHF 54.7 million (+4.1%) to CHF 1.4 billion. Headcount rose year on year by 237.2 to a total of 9,728.8 full-time positions. Implementing the initiatives associated with the Group strategy required additional resources. Staffing was also boosted at the Raiffeisen banks to serve and advise customers, further expanding local expertise.
General and administrative expenses
General and administrative expenses ( note 28) increased by CHF 23.3 million (+4.9%) to CHF 503.0 million. In the previous year the costs for general meetings and customer events were down sharply because of the pandemic. During the year under review, higher costs for general meetings and events related to 2021 were accrued under general and administrative expenses. Projects related to implementing the Group strategy Raiffeisen 2025 also caused a higher need for external services and consultancy.
Value adjustments on participations and depreciation and amortisation
of tangible fixed assets and intangible assets
Changes in provisions and other value adjustments, and losses
Changes in provisions and other value adjustments, and losses ( note 15) increased but at a low level, rising CHF 0.8 million (+36.3%) to CHF 3.1 million. No new provisions or value adjustments were recognised in this item during the year under review.
Extraordinary income and expenses
Tax expenses ( note 30) rose CHF 63.7 million year on year (+53.4%) to CHF 183.0 million. The financial statements of the Raiffeisen Group include provisions for deferred taxes so as to correctly present the tax effect of the measurement differences between the Group’s true-and-fair-view financial statements and the single-entity financial statements of the consolidated companies. As a result of Switzerland’s corporate tax reform, lower tax rates were used to calculate deferred taxes in 2020. This resulted in a reversal of provisions for deferred taxes and hence low tax expenses the previous year. The year under review saw a sharp rise in deferred tax expenses due to the very good result. The actual tax expenses were CHF 13.5 million higher than the previous year.
Amounts due from and liabilities to banks
Receivables and liabilities from securities financing transactions
Loans to clients
Trading portfolio assets ( note 3) declined by CHF 470.7 million (–15.5%) to CHF 2.6 billion. Owing to its short-term nature, the trading volume is generally subject to considerable fluctuations around the reporting date.
Financial investments ( note 5) mainly consist of investment-grade bonds, which are managed at Raiffeisen Switzerland in accordance with statutory liquidity requirements and internal liquidity targets. The financial investments are also managed on an opportunistic basis and can be subject to considerable fluctuations. Financial investments declined by CHF 280.1 million (–3.2%) to CHF 8.5 billion in 2021.
During the year under review, the book value of non-consolidated participations ( note 6) increased by CHF 40.8 million (+6.0%) to 724.1 million. This was mainly driven by the write-up of the participation in Leonteq AG, which is measured using the equity method.
Tangible fixed assets
Tangible fixed assets ( note 8) declined slightly year on year, down CHF 14.4 million (–0.5%) to a total of CHF 3.0 billion. New investments totalling CHF 200.3 million were made, mostly in bank buildings and other properties of the Raiffeisen banks. Against this stood depreciation of CHF 199.9 million and disposals of CHF 14.8 million.
Net investment, by category
|in million CHF||2017||2018||2019||2020||2021|
|Other real estate||10||53||17||6||36|
|Alterations and fixtures in third-party premises||11||9||26||34||17|
|Office machines, vehicles, security installations||3||13||9||4||5|
|Total net investment||344||383||247||195||185|
Net investment, by region
|in million CHF||2017||2018||2019||2020||2021|
|Lake Geneva region||16||35||27||36||36|
|Northwestern Switzerland and Zurich||29||59||38||39||26|
|Total net investment||344||383||247||195||185|
|1 Incl. central investment by Raiffeisen Switzerland.|
Amounts due in respect of customer deposits
Liabilities from other financial instruments at fair value
This item ( note 13) contains the structured products issued by Raiffeisen Switzerland B.V. Amsterdam, which are measured at market. Liabilities from other financial instruments at fair value were up CHF 37.4 million (+1.7%) to CHF 2.2 billion. The accounting treatment varies for structured products issued by Raiffeisen Switzerland. Their underlying components are reported in “Bond issues and central mortgage institution loans” and are covered below.
Bond issues and central mortgage institution loans
Bond issues and central mortgage institution loans ( note 14) increased relatively strongly by CHF 4.7 billion (+15.9%) to CHF 34.1 billion in the year under review. Central mortgage institution loans grew by CHF 1.2 billion to CHF 25.7 billion. Unsubordinated bonds of Raiffeisen Switzerland declined slightly due to a maturity. Raiffeisen Switzerland set up a money market programme under Swiss law in 2021. Since it was launched in January 2021, money market securities worth CHF 3.2 billion have been issued. Raiffeisen issued CHF 300 million of a new Additional Tier 1 bond in 2021 to further strengthen its solid capital base. As in the previous year, Raiffeisen again successfully placed several tranches of bail-in bonds to build up additional loss-absorbing capital under the systemic importance regime. In total, a volume of CHF 500 million was issued in 2021.
Capital adequacy / equity capital
The equity capital of the Raiffeisen Group (including minority interests) rose by CHF 759.5 million (+4.1%) to CHF 19.1 billion in the year under review. The cooperative capital ( note 16) increased CHF 172.6 million (+6.9%) to CHF 2.7 billion, thanks to the sustained demand for cooperative share certificates in the form of initial and repeat subscriptions. This demonstrates the continued high level of trust in Raiffeisen’s cooperative model. The high profit retention rate of 94% considerably strengthens the equity base. The TLAC ratio rose once again, and at 23.4% already completely satisfies both the transitional requirements of 15.4% applicable as from 31 December 2021 and the full requirements of 18.8% applicable as from 1 January 2026. The TLAC leverage ratio of 7.4% also comfortably meets the current requirements of 5.2% and the future requirements of 6.0%.
In 2019, FINMA gave Raiffeisen its approval to use the IRB model approach for calculating the regulatory capital adequacy starting on 30 September 2019. The approval is subject to the floor transitional rules. The IRB model approach will be phased in gradually over a three-year transitional period with an initially reduced application until it takes full effect at the end of 2022.
Financial outlook for 2022
The situation relating to the coronavirus pandemic has eased considerably. The market environment nevertheless remains challenging, as the war in Ukraine has sent global prices for food and, particularly, oil and gas shooting upwards. Given the low direct economic integration with Ukraine and Russia, Raiffeisen assumes there will be no major negative impact on the Swiss economy. Essentially, therefore, the prospects for another solid financial year for the banking group remain intact. This is subject to the caveat that the war does not spread and Europe does not experience huge shortages in energy supply. Outside Switzerland, high inflation is putting central banks under pressure to normalise their expansive monetary policy quickly, creating additional uncertainty. The Swiss National Bank is holding back for the time being because price pressures are not so strong in this country thanks to the strong franc. Even so, yields in the capital markets are moving up in Switzerland too, making financing conditions more expensive. Taking a long-term historical view, though, they are still attractive. This situation, together with tight supply, will likely continue to push up prices, particularly in the residential property segment. The trend is weakening, however, because equity and affordability requirements are increasingly limiting the pool of buyers.