PostFinance generated earnings before tax (EBT) of 125 million francs in the first half of 2018. That is 247 million francs less than in the first six months of the previous year. This decline was mainly due to a significant drop in income from the interest differential business and to a one-off item in the previous year. This negative development is in line with expectations created by the persistently low interest rates on the money and capital markets, and the trend is set to continue.

At 125 million francs, the interim result (EBT) in accordance with Group IFRS guidelines is down 247 million francs, or 66 percent, on the prior-year period. The decline was principally due to an 82 million franc reduction in net interest income. In addition, 6 million francs of value adjustments on financial investments were recognized in the first half of 2018, whereas reversals of impairment of 14 million francs had been recorded in the same period of the previous year. The result of the prior-year period was also impacted by one-off gains from the sale of two equity portfolios amounting to 109 million francs.

Income from the interest differential business has been declining for a number of years due to the low, and in some cases even negative, interest rates on the national and international financial markets, and the associated reduction in profitable investment options. At the same time, interest expense can only be reduced to a limited extent. Consequently, net interest income is collapsing – and the trend looks set to continue in the coming years.  To counter the decline in results, PostFinance has introduced measures in various business units to tap into new sources of income as well as to increase efficiency and reduce costs.

Among the non-interest-related business areas, the result from the service and commission business improved by a total of 15 million francs, while net trading income decreased by 18 million francs. Personnel expenses fell by 7 million francs.

Customer asset fee: lower threshold for wealthy private customers

The lack of profitable investment opportunities and lending prohibition mean that PostFinance remains obliged to hold a proportion of its customer deposits as liquidity at the Swiss National Bank (SNB). The negative interest that PostFinance has to pay on its sight deposit balance at the SNB which exceeds a certain threshold is partly passed on to business customers and wealthy private customers in the form of a customer asset fee. Despite this control measure, it received more than 3.6 billion francs of customer deposits in the past 12 months.

PostFinance therefore has no alternative but to reduce the threshold for the customer asset fee for private customers from the previous level of 1 million francs to 500,000 francs as at 1 October 2018. PostFinance introduced individual customer thresholds for business customers back in 2015. This measure will be applied even more consistently in future. The overwhelming majority of private and business customers will continue to be exempt from the customer asset fee.

The customer asset fee remains unchanged at 1 percent of the account balance which exceeds the threshold. It can be avoided by investing assets above the threshold, for example in funds or other securities.