The cooperative bank had a successful year. Boss Huber wants to assert himself better in a competitive market.
It was a good year for the Raiffeisen Group. The cooperative bank achieved 10 percent more profit. That is 1.18 billion francs. The mark of two million members of the cooperative was recently broken.
We earn more because the general level of interest rates has also risen.
The good business result is also due to the mortgages; Raiffeisen is the market leader here. The turnaround in interest rates does not seem to be able to harm Raiffeisen much. But customers pay more.
“We earn more because the general level of interest rates has also risen,” admits Raiffeisen boss Heinz Huber. But the bank also earns more with commissions and services.
Raiffeisen’s main business is the financing of houses and condominiums. Gone are the days when the bank was chasing customers away from the competition.
Legend:
Raiffeisenbank’s headquarters are in St. Gallen.
KEYSTONE/Gaetan Bally
For the first time last year, the bank was unable to grow and was only able to maintain its market share. 80 percent of mortgages have long terms. Most of them have been concluded at very good conditions for the customers.
The bank, on the other hand, has to raise this money at increasingly expensive times when interest rates are rising. But Huber is not worried: “Of course, the refinancing costs are increasing.” On the other hand, they would also have a balance sheet and interest rate management. They are therefore “relatively well” secured.
This means that anyone who takes out a mortgage with Raiffeisen now has to dig deep into their pockets – on average three times more than a year ago. That’s a lot more than the bank’s refinancing costs.
Historically, this price level is still relatively low.
Huber does not deny that Raiffeisen is now earning an excessive amount of money from new loans. However, it is the market that sets this price. “Historically, this price level is still relatively low.”
More and more customers are switching to a flexible money market mortgage. This is linked to the key interest rate of the National Bank. The only thing that remains fixed is the agreed margin, which Raiffeisen – like all banks – was able to increase. “In the short term, this is an attractive option for us,” says Huber, but adds that the customer will ultimately make his decision.
Mortgage business flattens out
For 2023, the bank does not expect the mortgage business to flatten out. And this despite the fact that owning a home is increasingly becoming a dream because of the rise in interest rates. Huber says they are still seeing a slight increase because demand is high and supply is very scarce. “So not much will change.”
Typical Raiffeisen customers also want to save for old age.
In addition, the bank does not expect real estate prices to fall noticeably. The second mainstay of Raiffeisen are members of the cooperative with a regular bank and savings account. However, the asset management business – i.e. the investment of customer funds in the money and stock markets – is not one of Raiffeisen’s strengths.
Hard-fought market
Huber now wants to change that. Because this business is high-margin thanks to high fees. Raiffeisen does not primarily stand for investments, says Huber. “However, we have noticed that typical Raiffeisen customers also want to save for old age and make investments here.”
The aim is also to pick up small savers. The entry threshold for asset management is reduced by half, 50,000 francs. This is how the bank wants to assert itself in this highly competitive market. Whether she succeeds is an open question. Earlier, when she ran this business with partner banks, she was unsuccessful.