Bank WIR grows to new record high

Bank WIR says it can look back on a successful first half of 2023: The purely Swiss cooperative bank recorded significant growth in both mortgage loans and customer deposits, resulting in total assets of 6.3 billion Swiss francs - an all-time high in the company's nearly 89-year history. The bottom line is a profit of 11 million francs. "This result is particularly pleasing because Bank WIR repeatedly 'swims against the tide' in industry comparisons in terms of conditions for the benefit of customers," CEO Bruno Stiegeler comments on the result. "For example, in contrast to common practice in the financial sector, we have consistently passed on the Swiss National Bank's interest rate hikes for savings and pensions and at the same time apply a very customer-friendly and transparent interest rate mechanism on the lending side for money market mortgages - also contrary to the 'mainstream'."

High interest on savings deposits

One example of this is the introduction of the "savings account plus" with an interest rate of 1.8 percent, which is high by current standards. Customers also seem to see it that way: Customer deposits increased by 3.4 percent to 4.4 billion Swiss francs. "With our interest rate policy, we are fulfilling our mission promise to offer top conditions for saving and providing for the future," says Stiegeler. On the assets side of the balance sheet, mortgage loans are up 3.8 percent to 4.6 billion Swiss francs. "This is high-quality growth based on our prudent risk policy," explains CFO Mathias Thurneysen. This is also reflected in the balanced refinancing mix of customer deposits and Pfandbrief loans, he adds.

In the case of money market mortgages, Bank WIR had opted for the "last reset" calculation method with the greatest transparency when switching to the Swiss reference interest rate Saron in February 2020, in which the adjustment of the Saron is reflected with a delay when interest is charged: "Our customers know the interest rate before the start of a quarter and are not charged retroactively," says Stiegeler. Together with the top conditions on savings and pension products as well as the increased refinancing costs (e.g. for Pfandbrief loans), this leads to a deliberately accepted slight reduction in net income in the interest business of 3.4 percent to CHF 31.9 million.

Solidly equity capitalized

Bank WIR's capital base far exceeds regulatory requirements, with a BIS ratio of 15.8 percent as of June 30 (regulatory target: 12.2 percent) and a leverage ratio of 8.6 percent (regulatory target: 3.0 percent), as measured by Basel III capital adequacy requirements. "Bank WIR is in good health and extremely solidly positioned," Thurneysen said. This assessment is also shared by the capital providers: Despite a very volatile market situation, the price of the participation certificate has risen by 3.2 percent to 480 Swiss francs since the beginning of the year - not yet taking into account the dividend payout of 10.75 Swiss francs (yield: 2.2 percent) per share approved by the Annual General Meeting at the beginning of June.

Continued success with VIAC product

According to WIR Bank, its VIAC product is also continuing on the road to success: Switzerland's first fully digital securities provisioning solution had around 82,700 customers as of June 30 (+4.6 percent since the beginning of the year), the company reports. Assets under management amount to CHF 2.6 billion, representing further growth of 19 percent since the beginning of the year. "These figures are also having a lasting impact on our earnings side," Thurneysen said. At the same time, Bank WIR and the VIAC team have taken the decision to further expand the successful model. "Next year, the platform is to be expanded with free securities savings," Stiegeler lets us look into his cards.

Among other things, the costs necessary for this lead to higher operating expenses. Other reasons for the increase of almost two million Swiss francs (+15 percent) are implementation projects from the agile strategy development, such as innovative developments around the topic of complementary currency, the consistent IT modernization, including the realization of the cloud strategy, and the very successful first appearance as a Premium Partner at the Tour de Suisse. The higher personnel costs are explained by the 2.5 percent increase in total wages and salaries already announced in the annual results, as well as the successful recruitment and filling of vacant positions.

Despite a further reduction in fees for the VIAC digital securities pension savings product and the continued sluggishness of business with the WIR complementary currency, income from the commission and services business was virtually maintained. The gradual reduction of trading positions already communicated last year has also been completed. "Bank WIR's overall result is now more predictable," says Thurneysen, explaining the strategic step.

Structures and processes are streamlined

For the second half of the year, Bank WIR expects a stronger interest business. In an environment that remains challenging, Stiegeler forecasts healthy growth for the entire fiscal year 2023: "We want to further expand our strong position as a savings and retirement savings bank and as a construction and real estate financing partner."

Bank WIR is also streamlining structures and processes as of January 1, 2024: Alexander Rohrbach (40, Banking Operations) and Andreas Rogler (52, IT & Services), the heads of two new divisions, are new members of the downsized Executive Board. They complement the Executive Board with the existing members Bruno Stiegeler (58, CEO), Matthias Pfeifer (41, Private and Corporate Clients) and CFO Mathias Thurneysen (38).

Source: Bank WE