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FINMA sees increased risks for Swiss financial sector

Zurich s banking district.
The Swiss Bankers Association (SBA) said in August that banks are facing uncertain conditions this year, following strong growth in 2021. © Keystone / Gaetan Bally

The Swiss financial sector is facing mounting risks due to uncertainty over lending and interest rates, according to the Swiss financial watchdog (FINMA).

The “FINMA Risk Monitoring 2022″ report publishedExternal link on Thursday identified seven principal risks for the financial sector, including interest rates, credit linked to mortgages and other loans, cyberattacks, combating money laundering, and increased impediments to cross-border market access.

Apart from the risk of cyberattacks, which remains high, the level of risk in all other categories has increased compared to last year, FINMA notes.

“Global economic growth has slowed down considerably in recent months due to the war in Ukraine. In view of the high inflationary pressures, central banks have altered their monetary policy and raised interest rates considerably in some cases,” the watchdog said.

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Swiss economy slows but stays in the black

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In August, the Swiss Bankers Association (SBA) said banks are facing uncertain conditions this year, following strong growth in 2021. Assets under management fell 4.4% between January and the end of June.

Business groups have also expressed concern about rising energy costs and shortages of some important materials.

The rate of inflation slowed to 3% in October from 3.3% in September. Wages in Switzerland are not keeping pace with inflation, and in 2022 the purchasing power of employees has dropped significantly. This has led to the highest loss in real wages for Swiss workers in 80 years.

In September UBS bank predicted GDP growth of 2.4% this year, but reduced its 2023 forecast from 0.9% growth to 0.6%.

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