ZKB Analysts See Upside for Swiss Banks Amid Regulatory Shifts

The ZKB report evaluates 20 financial services providers listed on the SIX Swiss Exchange, maintaining existing Overweight, Neutral, and Underweight ratings while updating the sector outlook based on recent half-year results. Analysts point to a stabilizing interest-rate environment and robust stock markets as primary tailwinds. Even as the Swiss National Bank maintains a zero-interest policy, a steeper yield curve and expectations of future rate hikes offer a path toward improved margins for domestic lenders.

ZKB identifies seven 'top picks' for investors, citing specific catalysts for growth. Partners Group is expected to overcome temporary fund-growth concerns through product diversification, while Julius Baer enters a new phase of stability following the conclusion of its Finma investigation. Similarly, VZ Holding is viewed as a beneficiary of AI integration rather than a victim of disruption, and Swissquote continues to leverage market volatility to drive customer activity. EFG, St. Galler Kantonalbank, and Banque Cantonale de Genève round out the list, with analysts highlighting their improved efficiency, dividend profiles, and valuation gaps.

Conversely, the research remains cautious on three institutions: Graubündner Kantonalbank, Glarner Kantonalbank, and Vontobel. Glarner Kantonalbank faces structural hurdles due to its narrow mortgage focus and low efficiency, alongside a significant pending legal dispute involving Remo Stoffel. Vontobel remains under pressure as its asset management division struggles with ongoing outflows and elevated costs. Half of the cohort, including UBS, remains in the Neutral category, reflecting a balanced outlook for the broader Swiss financial landscape.