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UBS analysts predict a drop in the benchmark mortgage rate from 1.75% to 1.50% on March 3, benefiting renters with potential rent reductions of about 2%. This change is expected to remain stable throughout 2025, with landlords required to adjust rents accordingly by the next contract termination date, likely between July and November.
Switzerland's inflation rate fell to 0.4% in January, while core inflation rose unexpectedly to 0.9%. Despite rising prices in certain sectors, the overarching disinflationary trend continues, prompting speculation about a potential interest rate cut by the Swiss National Bank in March. The future monetary policy direction remains uncertain, with discussions of negative rates and foreign exchange interventions.
Glarner Kantonalbank reported a net profit of CHF 24.3 million for 2024, with total assets rising to CHF 9.1 billion. The Board of Directors proposed a dividend of CHF 1.00 per share, reflecting a payout ratio of 55.6%. Despite interest rate cuts impacting income, the bank's mortgage business and commission services showed growth, while operating expenses remained stable.
St. Galler Kantonalbank (SGKB) reported a 3.8% increase in consolidated profit to CHF 215.1 million for 2024, despite a 10.4% drop in net interest income due to lower interest rates. The bank's balanced model and strong performance in commission and trading businesses helped offset losses, while customer deposits and loans grew significantly. SGKB plans to maintain its dividend at CHF 19 per share, with expectations for 2025 results to remain stable amid uncertain interest rate forecasts.
Urs Birchler, a prominent banking expert, critiques the Swiss financial sector for its reliance on taxpayer bailouts and the increasing risks posed by larger banks. His recent report on the Credit Suisse crisis highlights how the bank exploited capital adequacy exemptions, raising concerns about the lessons learned from past financial crises. Birchler emphasizes the need for a serious discussion on these issues, especially in light of deregulation trends.
PWC is assisting Swiss Radio and Television (SRF) with cost-cutting measures, which include the reduction of 50 full-time positions. Meanwhile, tensions rise between UBS and Finance Minister Karin Keller-Sutter over capital adequacy requirements, as UBS plans a share buyback despite falling equity. Additionally, the head of the Swiss-American Chamber of Commerce advocates for Switzerland to withdraw from the OECD minimum tax to foster tax dialogue with the USA.
The UBS Swiss Real Estate Bubble Index fell to 0.29 points in Q4 2024, indicating a moderate risk of a real estate bubble as property prices rose by 0.6% in the last three months and 2.4% year-on-year. Despite key rate cuts reducing ownership costs, prices are increasing faster than household incomes, with projections of a 3-4% rise in owner-occupied housing costs this year. Regional disparities persist, particularly in Vaud and Graubünden, where price-to-income and price-to-rent ratios are notably unbalanced.
Property prices in Switzerland rose by 0.6% in the fourth quarter of 2024, with a year-on-year increase of 2.4%. Despite this, UBS reports a diminishing risk of a real estate bubble, with its index falling to 0.29 points, indicating moderate risk. The Swiss National Bank's interest rate cuts have made home ownership more affordable, although prices are still outpacing household income growth.
Property prices in Switzerland rose by 0.6% in the fourth quarter of 2024, with a year-on-year increase of 2.4%. Despite this, the UBS Swiss Real Estate Bubble Index fell to 0.29 points, indicating a moderate risk of a bubble, as rising purchase prices outpace household incomes. The outlook suggests a further increase in owner-occupied housing costs by 3% to 4% this year, with notable imbalances in regions like Vaud and Graubünden.
St. Galler Kantonalbank hosted an event focusing on the regional economy, the EU, and the USA, featuring insights from experts on the automotive industry and investment strategies. Dominik Schmidlin highlighted a mixed economic outlook for Eastern Switzerland, with stable domestic markets but weak foreign demand, particularly from southern Germany. Meanwhile, Thomas Stucki noted that the global economy is expected to grow unevenly, with the USA continuing as a growth engine despite Germany's decline.
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