Geneva (awp) – Faced with the uncertainties linked to the Covid pandemic, the Cantonal Bank of Geneva (BCGE) preferred to play it safe. The establishment made provisions to protect itself against possible credit risks from its business customers, which weighed on profitability and profit in the first half of the year.
Between January and June, the negative impact of the coronavirus on the credit portfolio amounted to 15 million Swiss francs, out of a total volume of some 17 billion. “The deterioration is quite minimal in percentage,” said Managing Director Blaise Goetschin on Tuesday at a press conference.
The boss of the bank however wished to reassure, the bankruptcies of proven companies are rare in the canton and these are minor cases. Despite a contained risk, the BCGE has put some “nuts in reserve”, pictured Mr. Goetschin.
These provisions notably weighed on the net income from interest operations, the establishment’s main source of income. This indicator declined by 6.5% over one year to 111.5 million Swiss francs. Removed from this negative effect, the credit activity generated revenue up 1.0%.
The Geneva establishment has granted some 2,000 Covid credits as part of the economic support program launched by the Confederation, for a total volume of more than 200 million Swiss francs, a statement said.
Commission income has also suffered from the consequences of the pandemic, particularly in the financing of trade due to the fall in commodity prices.
The less remunerative SIX participation
Certain financial factors also weighed on performance, amounting to “tens of millions” of Swiss francs. In particular, the SIX group paid an extraordinary dividend in 2019, bringing the total contribution to 6.7 million Swiss francs, against 1.2 million recorded in the first half of this year.
Operating income fell 17% to 183.1 million Swiss francs, while expenses remained stable (+ 0.2%) at 117.8 million.
Operating income sank 46.5% to 50.6 million and net profit contracted 6.6% to 55.3 million. These variations are in line with those announced in the earnings warning issued at the end of July.
Assets under management and administration grew 1.7% to $ 30.92 billion.
The balance sheet amounted to 26.87 billion, an increase of 7.8% over six months. Mortgage loans swelled 1.9% to 11.90 billion and customer deposits 4.4% to 15.61 billion.
The hard capital ratio (Tier 1) remained more or less stable at 15%.
Management reaffirms the outlook formulated at the end of July, namely a slight decline in results, nevertheless allowing growth in equity. The distribution of the dividend is assured, even if Blaise Goetschin did not wish to comment on the level of remuneration. BCGE usually pays a third of the net profit to its shareholders, he recalled.
Uncertainties remain for the second part of the year, even if it started well. “July was a good month in terms of results,” explained CFO Eric Bourgeaux.
At 2:00 p.m., BCGE shares lost 0.6% to 178.00 Swiss francs, in an SPI up 0.67%.
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