Banks Basler Kantonalbank achieves higher half-year profit

In the first half of its anniversary year 2024, Basler Kantonalbank (BKB) reports a higher consolidated profit despite declining income. Following the SNB's interest rate cuts, the state-owned bank felt the impact of narrowing margins in the interest business.

The banking group, which includes Bank Cler as well as the BKB parent bank, announced on Thursday that its operating result fell by 15 percent year-on-year to 132.5 million francs. Thanks to a lower level of bank reserves compared to the previous year, the bottom line was nevertheless a 6 percent higher consolidated profit of CHF 80.3 million.

No interest rate adjustment for clients

Overall, the BKB Group's operating income was 4.1 percent down on the previous year at CHF 323.3 million. The banking group was particularly affected by a "normalization" of interest margins following the interest rate cuts by the Swiss National Bank (SNB) in the first half of the year. BKB has refrained from adjusting interest rates on customer deposits for the time being. As a result, net income in the interest business fell by 3.9 percent to 221.1 million francs.

In contrast, the bank was able to increase commission and service income slightly (+1.1 percent to 68.3 million). It benefited from rising custody account assets. However, income in the trading business was significantly lower (-18.7 percent to 28.9 million). Here, trading in interest rate instruments weakened noticeably as interest rates fell.

Expansion of advisory capacity

Operating expenses were 7.5% higher than in the previous year at CHF 179.5 million. This was due to the expansion of advisory capacity, but also to "investments made according to plan". The cost/income ratio deteriorated to 55.2 percent (previous year 49.6 percent), but this is still in line with the strategic target.

Mortgage loans increased moderately by 1.1 percent to 33.5 billion Swiss francs: they grew "in line with the market trend", writes the bank. On the other side of the balance sheet, customer deposits increased by a further 1.4 percent.

Increase in income

At the parent bank BKB, operating income fell by 11.1 percent to 109.7 million in the first half of the year. After a one-third reduction in reserves, the BKB parent bank posted a 5.0 percent higher half-year profit of 73.6 million.

In the second half of the year, the bank expects a slight increase in income compared to the first half, depending on the expected development of interest rates. The bank also intends to press ahead with the completion of "forward-looking" projects, such as digital onboarding, the cloud transformation and the introduction of instant payments. Overall, BKB is confident that it will also achieve a "good to very good result" in 2024, the year in which the cantonal bank celebrates its 125th anniversary.