Swiss banks focused on property lending are taking more risks to compensate for the effects of low interest rates, increasing the threat of a real-estate bubble, Swiss National Bank (SNB) Vice President Fritz Zurbruegg said.
“Exceptionally low interest rates are putting pressure on interest rate margins and this is weighing on the profitability of Swiss banks,” Zurbruegg said in a speech in Bern on Thursday.
That “creates an incentive for banks to step up their exposure to interest-rate risk and adopt an imprudent attitude in their affordability assessment,” Zurbruegg said.
Swiss lenders have been struggling to offset the squeeze of a minus-0.75 percent deposit rate imposed by the central bank to protect the nation’s economy and weaken the Swiss franc.
While the return on investment from mortgages to bonds has fallen, most of the nation’s banks — including the two largest, UBS Group AG and Credit Suisse Group AG — have steered clear from charging private clients’ deposits.
While banks with a larger focus on Switzerland have “taken on additional interest-rate risk” since the central bank lowered borrowing costs below zero percent, lenders’ exposure is “manageable at the moment” partly amid stricter capital rules, Zurbruegg said.
Risks to the Swiss property market remained elevated in the three months through September, according to a quarterly index compiled by UBS.
While the buy-to-rent price ratio reached an all-time high, moderate mortgage growth and a strengthening economy prevented imbalances in the owner-occupied housing market from widening, it said in the report on Nov. 2.
Overall, “the negative interest rate charged on banks’ sight deposits at the SNB is indispensable from a monetary policy perspective,” he said. “Given low interest rates around the world and the difficult global economic situation, negative interest ... serves to ease upward pressure on the Swiss franc.”
SEMICONDUCTORS: The German laser and plasma generator company will expand its local services as its specialized offerings support Taiwan’s semiconductor industries Trumpf SE + Co KG, a global leader in supplying laser technology and plasma generators used in chip production, is expanding its investments in Taiwan in an effort to deeply integrate into the global semiconductor supply chain in the pursuit of growth. The company, headquartered in Ditzingen, Germany, has invested significantly in a newly inaugurated regional technical center for plasma generators in Taoyuan, its latest expansion in Taiwan after being engaged in various industries for more than 25 years. The center, the first of its kind Trumpf built outside Germany, aims to serve customers from Taiwan, Japan, Southeast Asia and South Korea,
Gasoline and diesel prices at domestic fuel stations are to fall NT$0.2 per liter this week, down for a second consecutive week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to drop to NT$26.4, NT$27.9 and NT$29.9 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to fall to NT$24.8 per liter at CPC stations and NT$24.6 at Formosa pumps, they said. The price adjustments came even as international crude oil prices rose last week, as traders
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which supplies advanced chips to Nvidia Corp and Apple Inc, yesterday reported NT$1.046 trillion (US$33.1 billion) in revenue for last quarter, driven by constantly strong demand for artificial intelligence (AI) chips, falling in the upper end of its forecast. Based on TSMC’s financial guidance, revenue would expand about 22 percent sequentially to the range from US$32.2 billion to US$33.4 billion during the final quarter of 2024, it told investors in October last year. Last year in total, revenue jumped 31.61 percent to NT$3.81 trillion, compared with NT$2.89 trillion generated in the year before, according to
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
RSS