Swiss banks could soon seek new ways to put pressure on borrowers, while their margins on credits are undermined by the introduction of zero rate by the Swiss National Bank (SNB). According to analysts, this could result in the cost of certain banking services and types of credits.
The decision made in June by the BNS to lower its key rate to zero has placed the cost of borrowing in Switzerland at the lowest level among large economies – much lower, for example, at the 2.0 % key deposit rate of the European Central Bank.
Consequently, banks could see their net interest income drop by around 660 million Swiss francs ($ 830 million) this year, Daniel Geissmann, from ZEB bank consulting firm, estimates. Banks generated around 20 billion francs thanks to this activity in 2024.
“Zero interest rates represent the worst scenario for banks,” explains Daniel Geissmann. “Banks are losing because they cannot repercuss the drop in levels on deposits. »»
The last time interest rates were around 0 %, between 2011 and 2015, the net interest of Swiss banks had dropped from 1.4 %to 1.1 %, affecting their profits, according to BNS data.
Geissmann estimates that the banks had lost nearly 4 billion francs between 2011 and 2014, but he notes that the effect should be less marked this time, establishments starting from an already lower level of margin.
Reluctant to make the cost of depositors support via negative rates, banks will have to compensate for missing income elsewhere if they want to preserve their profits.
Martin Hess, chief economist of the Swiss Banker Association (ASB), warns that credit could become more expensive, banks that should resort to more expensive sources of funding, such as capital market instruments, replacing deposits.
“Ultimately, this will be passed on to the real economy and customers,” he said, evoking an increase in the cost of mortgages.
REAL ESTATE
Ultra-basic interest rates tend to boost real estate demand. Between 2011 and 2015, housing prices jumped 15 %, three times more than between 2000 and 2005, according to the SNB.
“This has increased the risks of overvaluation and correction on the real estate market, even if it did not happen the last time,” explains Gianluigi Mandruzzato, economist at EFG Bank.
“These risks could again appear. »»
The situation was also difficult for insurers and pension funds, which struggled to generate sufficient yields to honor their commitments, bond revenues having collapsed, he adds.
Maxime Botteron, economist at UBS, believes that banks could also become more reluctant to lend if the rate curve was to be paved more or to revers up with zero rates.
The scholarship is also not spared by the impact of zero BNS rates. With official rates much lower than those of other European and North American central banks, the actions of the main Swiss Swiss banks already have a delay compared to their counterparts.
UBS’s actions, subject to more strict equity requirements since the buyout of Credit Suisse in 2023, only increased by 2.2 % in 2025, while those of Julius Baer fell by 6.7 %, the new direction trying to turn the page on a series of recent reverse.
By way of comparison, the Stoxx index of European banks won 29.3 % this year, thus stressing the Swiss underperformance.
Savings and credit banks are the most exposed to the erosion of margins on loans.
Establishments like Raiffeisen and Valiant, which mainly collect deposits and grant mortgages, draw more than 70 % of their income from the activity of interest, according to their figures.
Conversely, fortune managers like Julius Baer and Vontobel, of which only 10 % of income comes from interest, are less affected. Diversified lenders like UBS (around 15 %) and ZKB (54 %) are between the two.
For Andreas Venditti, bank analyst at Vontobel, the extent of the impact of zero rates on banks will especially depend on the duration of this situation.
“The problem worsened if you stay zero for a long time,” he explains. “The margins of interest in Europe, and especially in the United States, are much higher. »»
($ 1 = 0.7966 Swiss franc)
