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Raiffeisen banks in St.Gallen reported a decline in earnings for 2024 due to lower interest rates, despite creating over 50 new jobs and a flourishing stock market business. While net interest income fell, the banks' diversification into investment services led to a slight increase in net profit to CHF 50 million. The overall economic environment remains stable, with rising demand for residential property and job security supporting consumption, despite challenges in the industrial sector.
The planned abolition of the taxation of imputed rental value for owner-occupied properties in Switzerland could lead to significant tax savings for homeowners, enhancing the financial appeal of home ownership. However, the construction industry may face long-term challenges due to reduced investment in renovations, as tax maintenance deductions are eliminated. The reform is expected to result in billions in lost tax revenue for authorities if current interest rates remain low.
Indirect Swiss real estate investments surged in popularity towards the end of 2024, driven by a cycle of interest rate cuts, with total returns of 16.4% for real estate stocks and 17.6% for listed funds, significantly outperforming the Swiss stock market's 6.2%. However, further interest rate cuts are already factored into current prices, suggesting limited potential for similar gains in 2025. The market is characterized by high premiums on net asset values and a shortage of properties, alongside rising rents, making real estate an attractive investment option.
The Raiffeisen banks in the St.Gallen, Appenzell, and Glarus region reported a consolidated annual profit of CHF 49.6 million for 2024, reflecting a 0.7% increase from the previous year. While income from the interest business declined by 8.3% to CHF 337.7 million, the investment business thrived, with customer deposits rising by 2% to CHF 26 billion and a notable 13.3% increase in commission and services income to CHF 82.6 million. The total custody account volume reached CHF 7.9 billion, bolstered by the opening of 6,700 new accounts and favorable market conditions.
Raiffeisen reports a significant shift in Switzerland's residential property market, with home ownership becoming 17% cheaper than renting, expected to rise to 30% as interest rates decrease. Demand for ownership is increasing, while tenants face rising rents and a housing shortage. The potential abolition of the imputed rental value could further enhance home ownership attractiveness, though it may negatively impact the construction industry and retail banks.
Switzerland is set to vote on a reform of the imputed rental value, a tax on notional rental income for homeowners. The proposed changes would eliminate tax deductions for mortgage interest and maintenance costs for owner-occupied properties, benefiting first-time buyers and retirees while disadvantaging those with properties needing renovation. The reform could lead to significant revenue losses for the state and construction industry, with a referendum expected in fall 2025 and potential implementation by 2028.
Switzerland is set to vote on a significant reform regarding the taxation of owner-occupied residential properties, which could abolish the imputed rental value tax. Homeowners may benefit from tax savings, particularly first-time buyers and retirees, while those with properties needing renovation could face losses. The construction industry and state revenues are expected to decline, with potential property taxes on vacation homes introduced to offset losses.
The abolition of imputed rental value is poised to benefit many homeowners, particularly first-time buyers and retirees, who would see significant tax savings. However, the federal government and cantons face billions in lost revenue, while property owners needing renovations may gain the least due to the inability to deduct maintenance costs. A tough referendum campaign is anticipated as opposition mounts from various political and business sectors.
Appenzell Raiffeisen banks have demonstrated stability and growth, with customer loans increasing by 5.3% and deposits by 2.3%. Celebrating 125 years, the cooperative bank is investing CHF 125,000 in local projects and offering members exclusive benefits, reinforcing its commitment to the community and sustainable banking.
Leonteq faces a crisis as Lukas Ruflin will not join the Board of Directors, contradicting earlier announcements. The company's share price has plummeted, raising takeover speculation involving UBS and Raiffeisen, which holds a significant stake. Regulatory scrutiny intensifies following allegations of questionable financial practices, with Leonteq penalized for serious risk management breaches.
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