Result

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

Key figures

in CHF million, percent, number20202021Change in %
Key figures income statement
Gross result from interest operations 2,3502,4022.2
Result from commission business and services45153618.8
Operating income3,0603,38310.6
Operating expenses1,8171,8954.3
Operating result 9671,26831.1
Group profit 8611,06924.2
Cost income ratio 59.4%56.0%
Key balance sheet figures
Total assets259,653284,4899.6
Loans to clients200,358206,3553
of which mortgage receivables190,317196,3603.2
Customer deposits190,425201,7295.9
in % of loans to clients95.0%97.8%
Total equity (without minority interests)18,44419,1794
Capital resources/liquidity1
CET1 ratio18.6%20.3%
Tier 1 ratio (going concern)19.6%21.7%
TLAC ratio20.6%23.4%
TLAC leverage ratio7.3%7.4%
Liquidity Coverage Ratio (LCR)2159.4%185.4%
Net Stable Funding Ratio (NSFR)3141.5%144.9%
Market data
Share of mortgage market17.6%17.6%
Market share of client deposits13.8%14.0%
Number of clients3,553,1903,606,5401.5
Number of cooperative members1,935,7901,963,5931.4
Client assets
Client assets under management4224,042241,2267.7
Net new money client assets under management16,32814,509-11.1
Risk ratio lending business
Value adjustments for default risks261243-7
as % of loans to clients0.130%0.118%
Value adjustments for expected losses (risk provisions)5 n/a482n/a
Resources
Number of employees 11,20711,4652.3
Number of full-time positions9,4929,7292.5
Number of locations824820-0.5
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".

Outstanding result

Raiffeisen can look back on a very successful year. Profit of CHF 1.07 billion was well above the previous year. The Group achieved the strategic targets set for 2021. Raiffeisen expanded digital services for clients and further diversified the business model as a result of the successful investing and saving for retirement business. The Group is further expanding its strong position in the customer business.
Business volumes rose again and operating profitability remains strong. All income items were up. The performance of the commission business and service transactions was particularly encouraging, gaining almost 20%. Volumes in fund savings plan and retirement custody accounts rose almost 40%, and asset management mandates increased by over 120%. The high net new money figure of CHF 14.5 billion demonstrates the great trust customers have in the 219 Raiffeisen banks. Even in times which remain challenging, Raiffeisen showed itself to be a strong partner and generated an outstanding result.

High level of customer trust – sustained strong growth in the core business

Growth in client assets continued at a high level in 2021. They increased by CHF 19.3 billion (+8.5%) to a total of CHF 247.1 billion. The first reason for this growth was a sharp increase in customer deposits. The rise here amounted to CHF 11.3 billion (+5.9%). Second, custody account volumes rose a powerful CHF 8.0 billion (21.7%) to CHF 45.1 billion. The year under review saw some 68,000 new custody accounts opened, or 268 every working day.
Raiffeisen also welcomed a large number of new clients (+53,350), taking the total to 3.61 million. The number of cooperative members rose too, by 27,803 to a total of 1.96 million.
Growth in the mortgage business was in line with the market, as planned. Mortgage loans increased by CHF 6.0 billion (+3.2%) to CHF 196.4 billion. Healthy growth in the core business on a par with the market fits the ambition and strategy of Raiffeisen. At the same time, growth in customer deposits was stronger, so the funding ratio improved from 95.0% in the previous year to 97.8%. The Raiffeisen Group expanded its services in private residential property during the year under review. In August, together with Mobiliar, the Group launched the Liiva digital residential property platform. This means the Group is able to cover additional customer needs related to buying and modernising private residential property. Raiffeisen also became the first Swiss bank to integrate a modernisation planner into the advisory process. In doing so, Raiffeisen further expanded its property expertise beyond the traditional mortgage business.

Positive trend in all income items

The operating business of the Raiffeisen Group put in a particularly positive performance in 2021. All income items contributed to this. However, interest operations remained under pressure. The interest margin declined again during the year under review, falling from 0.93% to 0.89%. Thanks to the growth in the lending business and prudent balance sheet management, though, it still proved possible to increase the gross result from interest operations by CHF 52.3 million (+2.2%). Following a slight rise in value adjustments in the previous year due to the uncertain economic outlook, the recovery during the year under review led to a net reversal of value adjustments for default risks of CHF 12.1 million. The net result from interest operations climbed CHF 116.9 million (+5.1%) from the previous year to CHF 2.4 billion.
Efforts by the Raiffeisen Group to diversify the business areas continue to bear fruit. The successful expansion of the investing and saving for retirement business is reflected in the very pleasing trend in the result from commission business and service transactions. The year on year increase was a hefty CHF 85.0 million (+18.8%) to CHF 536.1 million. The supportive stock exchange environment meant that securities transactions were up strongly too, and the Group enjoyed high inflows in the investing and saving for retirement business in the year under review. The result from trading activities increased by CHF 29.9 million (+13.9%) to CHF 244.6 million. Higher income from participations and the sale of financial investments pushed up the other result from ordinary activities by CHF 91.4 million (+93.8%). Overall, operating income grew strongly, rising CHF 323.2 million (+10.6%) to CHF 3.4 billion.

Higher costs due to investing in the Group strategy

In the year under review, operating expenses rose as expected by CHF 78.0 million (+4.3%) to CHF 1.9 billion. First, personnel expenses grew by CHF 54.7 million (+4.1%). More staff were needed in 2021 to implement the Group strategy. The Raiffeisen banks also took on more employees locally to serve clients. Second, operating expenditure grew CHF 23.3 million (+4.9%). No events had been held the previous year because of the pandemic, but this expenditure was up again in 2021. There was also more need for external services and consultancy in connection with projects, especially implementing the Group strategy.
Despite higher costs overall, the Group further improved productivity. The considerable increase in income and the lesser rise in costs meant the cost/income ratio improved again, from 59.4% at the end of the previous year to 56.0%. Depreciation of tangible fixed assets, value adjustments on participations and provisions were considerably lower overall in the year under review. The strong operating business, combined with positive one-off effects in the participations, resulted in a high CHF 1.3 billion operating result, a rise of CHF 300.8 million (+31.1%) on the previous year.

Safe and with a strong capital position

The Raiffeisen Group put in a very good performance and generated an excellent result. Operating profitability remains strong. Group profit was CHF 1.07 billion, up CHF 208.1 million (+24.2%) from the previous year to a record level. Around 94% of the Group profit will be retained, increasing the reserves and the capital base and further strengthening the safety and stability of the cooperative banking group.

Income statement

Income from operating activities

The performance of income from operating activities was very positive throughout. All income income­ items gained and total operating income posted a strong rise of CHF 323.2 million (+10.6%) to CHF 3.4 billion.

Interest operations

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.

Trading activities

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.

Operating expenses

Under operating expenses, both personnel expenses and operating expenditure were up. Operating expenses increased by a total of CHF 78.0 million (+4.3%) from the previous year to CHF 1.9 billion. The rise in costs is in line with expectations and comes deliberately as part of the implementation of the Group strategy.

Personnel expenses

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

Value adjustments on participations and depreciation and amortisation of tangible fixed assets and intangible assets fell by CHF 56.5 million (–20.6%) to a total of CHF 217.4 million. Depreciation on tangible fixed assets declined by CHF 12 million and depreciation and amortisation of participations and goodwill was CHF 45.4 million lower. In the previous year, the participation in Viseca Holding AG, which is measured using the equity method, required a substantial negative value adjustment, but the year under review saw much lower value adjustments on participations.

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.

Operating result

Thanks to the strong operating business and one-off effects in the participations, Raiffeisen increased the operating result by CHF 300.8 million to CHF 1.3 billion in the year under review.

Extraordinary income and expenses

The extraordinary income of CHF 8.6 million includes in particular profits from sales of tangible fixed assets of CHF 7.5 million. Losses from the sale of tangible assets of CHF 0.7 million are the largest item in the extraordinary expenses of CHF 0.9 million.

Taxes

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.

Balance sheet

The strong growth in total assets, up CHF 24.8 billion (+9.6%) to CHF 284.5 billion, is chiefly attributable to the high inflows seen in the customer deposit business. This had a positive impact on the liquidity position of the Raiffeisen Group.

Amounts due from and liabilities to banks

Amounts due from banks declined by CHF 791.3 million (–19.6%) to CHF 3.2 billion. Liabilities to banks rose sharply by CHF 5.4 billion (+50.7%) to CHF 15.9 billion. These items are generally subject to major fluctuations around the reporting date due to the active management of liquidity and the balance sheet.

Receivables and liabilities from securities financing transactions

Securities financing transactions are also subject to considerable fluctuations depending on the need for liquidity management. As in the previous year, the Raiffeisen Group had no receivables from securities financing transactions on the balance sheet in the year under review. As part of active liquidity management, liabilities from securities financing transactions rose CHF 3.3 billion (+78.2%) to CHF 7.5 billion) in 2021.

Loans to clients

The steady growth in the core business continued. Mortgage loans increased by CHF 6.0 billion (+3.2%) to CHF 196.4 billion. This was a slightly greater rise than in the previous year; the same applied to the growth of the market, which was up by the same order of magnitude. Market share was stable at 17.6%. Growth roughly in line with the market fits the Group strategy and reflects the cautious risk policy. The largest share of loans backed by real estate – about 87% – is secured on residential property, where the average loan/value ratio is a low 60%.
Amounts due from clients fell slightly by CHF 45.4 million (–0.5%) to a total of CHF 10.0 billion. In the previous year this item saw above-average growth because of Covid-19 loans to Swiss SMEs under the federal and cantonal guarantee programmes. Outstanding Covid-19 loans were down by about CHF 280 million net compared to the end of the previous year, while the normal corporate client business grew. The share of unsecured loans to corporate clients (excluding public-sector entities) remains very low at 2.4%.
Value adjustments on default risks for impaired loans/receivables remain very low at CHF 243.0 million. This is equivalent to 0.118% of the total volume of lending (previous year: 0.130%).
In accordance with the new requirements in FINMA Circular 2020/1 “Accounting – banks” on recognising value adjustments and provisions as part of provisioning for latent risks, Raiffeisen recognised CHF 493.2 million of value adjustments for expected losses on unimpaired loans to clients. Raiffeisen allocated the full amount of additional new value adjustments required by making a reclassification in the balance sheet from retained earnings reserves as at 1 January 2021, and offset them directly against the receivables in the balance sheet. As at 31 December 2021, value adjustments for expected losses on unimpaired loans in the amount of CHF 482.3 million were recognised.

Trading activities

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

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.

Non-consolidated participations

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 CHF20172018201920202021
Bank buildings 76109928589
Other real estate 105317636
Alterations and fixtures in third-party premises 119263417
IT hardware 1514162110
IT software208157562415
ATMs91215117
Furniture46642
Fixtures8101064
Office machines, vehicles, security installations313945
Total net investment344383247195185

Net investment, by region

in million CHF20172018201920202021
Lake Geneva region1635273636
Espace Mittelland 3543382944
Northwestern Switzerland and Zurich2959383926
Eastern Switzerland1227217955351
Central Switzerland 212140287
Ticino16891021
Total net investment344383247195185
1 Incl. central investment by Raiffeisen Switzerland.

Intangible assets ( note 9) consist of goodwill on participations, primarily concerning Leonteq AG. Raiffeisen wrote off the remaining goodwill on participations in full in 2021.

Amounts due in respect of customer deposits

Customer deposits grew strongly again in the year under review, with their volume exceeding CHF 200 billion for the first time. The rise was slightly less than the very high growth the previous year. Even so, at CHF 11.3 billion (+5.9%) to a total of CHF 201.7 billion, it was still a considerable increase. As Raiffeisen grew in customer deposits slightly faster than the market, its market share was up from 13.8% to 14.0%.
Due to customer deposits increasing significantly while loan growth was only moderate, the funding ratio improved from 95.0% to 97.8%. Almost all loans to clients are covered by customer deposits.
Client assets – customer deposits plus custody account volumes – rose an impressive CHF 19.3 billion (+8.5%) to CHF 247.1 billion. Net new money in the retail business was CHF 14.5 billion, which is a reflection of the sustained high level of trust customers place in the Raiffeisen Group.

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.

Within the Raiffeisen Group, both Raiffeisen Switzerland B.V. Amsterdam and Raiffeisen Switzerland issued structured products. The instruments underlying the structured products issued by Raiffeisen Switzerland fell by CHF 0.4 million to a total of CHF 1.4 billion. The excellent conditions in the market resulted in consistently good trading volumes throughout the year. At the same time, the buoyant markets also led to many early redemptions. It was not possible to roll all of these over into new structures. Overall, the Raiffeisen Group’s portfolio of structured products fell by CHF 316.2 million to CHF 3.6 billion.

Provisions

Provisions decreased by CHF 34.4 million (–3.6%) to CHF 933.1 million. Provisions for deferred taxes were down CHF 44.0 million year on year. As at 31 December 2021, provisions for expected losses in accordance with the new requirements in FINMA Circular 2020/1 “Accounting – banks” amounted to CHF 31.6 million, a rise of CHF 1.2 million over the year. Provisions amounting to CHF 20.6 million were applied for their intended purpose.

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.

Development of the Raiffeisen Group's business

Raiffeisen is well-positioned and started 2022 from a position of strength. Rigorous implementation of the Group strategy Raiffeisen 2025 aims to diversify the income base further. In particular, by continuing to professionalise the investing and saving for retirement business it should prove possible to further increase income from commission business and service transactions in the year ahead. The market environment will remain challenging owing to the persistently low level of interest rates. Raiffeisen expects a slight fall in the result from interest operations from the high figure seen in 2021. On the cost side, Raiffeisen assumes operating expenses will be higher because of higher investments to implement the Group strategy and as a result of growth.