2020

Foreword
Thomas Müller

Thomas Müller
CEO

Philippe Vidal

Philippe Vidal
Chairman of the Board of Directors

Foreword Annual Report 2020

   

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In every respect, the pandemic in 2020 challenged us, gave us food for thought and showed that a good dose of humility, persistence and solidarity go a long way in times of crisis. We would therefore like to start this year’s foreword to the 111th annual report of Bank CIC with two big thank-yous:

Thank you to our valued clients, who placed their trust in us again in 2020 and impressively underscored this with a rise in business volume of CHF 3 billion and a new asset growth of over CHF 2 billion. Our clients are at the heart of what we do and motivate us to offer security and reliability in these challenging times.

We would also like to thank our employees, whose tireless commitment, presence and tailored solutions achieved extraordinary things in an extraordinary year, earning and justifying the trust of our clients. Our employees are the essential part of our bank; they make us special and allow us to develop in partnership with our clients.

The pandemic pushed our society to its limits in 2020. Bank CIC acted like an entrepreneur, and devoted its attention to existing clients and their issues. We made coronavirus bridging loans available to our clients literally overnight – that is our flexibility. We have been there for our clients unreservedly and without interruption – that is our commitment. We were the first bank to introduce multibanking with payment transactions – that is digital transformation and innovation. We have significantly expanded our social and cultural commitments in order to support in particular those individuals who have been severely affected by the pandemic – that is long-term partnership. This focus slowed down our growth in client numbers, but cooperation with clients became even more intensive and there was a sharp rise in volumes per client.

Total assets rose to CHF 11.6 billion and interest, commission and trading income were up between 2% and 25%. At the same time we pursued our digitalisation strategy, which bore fruit amongst other things in our omnichannel approach and the smooth switch to 70% working from home. Personnel costs and material costs were up again accordingly, but income increased far more strongly. Overall we boosted operating profit considerably to CHF 48.9 million, with net profit up slightly to CHF 34.2 million.

The operating progress is pleasing, but 2020 highlighted the risks in our globalised world. That’s why it is crucial for us that our bank has stood on solid foundations for over 100 years, and we further strengthened these in 2020. Hence we maintained our prudent risk policy, quadrupling our risk provisioning and also increasing the reserves for general banking risks to CHF 57.5 million. Our shareholder Crédit Mutuel Group, one of the best capitalised banking groups in Europe, also invested a further CHF 30 million in our bank; we therefore strengthened our total capital by almost CHF 70 million in 2020.

Marie Curie once said,

One never notices what has been done; one can only see what remains to be done.

We do not want to rest on past successes and challenges overcome. We want to learn from them and tackle the future. The future always involves uncertainty and it is our job to avoid risks and seize opportunities by pursuing a prudent business policy and providing skilled support to our clients. Along the way, let us not forget virtues like appreciating nature and the environment, deliberately keeping up social contacts and taking pleasure in small things - let’s keep them up. The only way to successfully shape the future is to see social developments and regulatory changes as an opportunity and combine them with clear values.

We are still here for our clients in 2021. We want to understand our clients, offer them individual and customised solutions that fit the circumstances, minimise risks and maximise opportunities; that is our promise for the future. We are confident that the threatening dark clouds of the pandemic and economic performance will clear away and we look forward to accompanying you along a sustainable path in the future.

Signature Thomas Müller

Thomas Müller
CEO

Signature Philippe Vidal

Philippe Vidal
Chairman of the Board of Directors

Facts and figures

- billion

Total assets in CHF

Income structure
Change in results from commission business
2016 2017 2018 2019 2020
Net New Assets
+ 2.1 billion
Management Committee as of January 2021
Geschäftsleitung Bank CIC

From left to right: David Fusi, Thomas Müller, Patrick Python, Christoph Bütikofer, Michel Berger

Market review and outlook
Mario Geniale

Mario Geniale
Head Investments of Bank CIC (Switzerland) Ltd.

Luca Carrozzo

Luca Carrozzo
Chief Investment Officer of Bank CIC (Switzerland) Ltd.

Market review and outlook

Marco Geniale and Luca Carrozzo summarise the key events on the financial markets in 2020 and put forward some ideas on political and economic trends in 2021.

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How would you describe 2020 as far as investments are concerned?
Luca Carrozzo (LC): After the exceptionally positive 2019, share prices initially kept moving seamlessly upwards in 2020. But when the pandemic broke out in February, equity markets tumbled. The major indices lost up to 30% in a few weeks. This was because of fears that the economy would suffer the biggest collapse since the second world war. All over the world, governments responded to the coronavirus with lockdowns, shutting down catering businesses and shops, and many borders were partly closed too. The resultant massive collapse in the economy prompted central banks and governments to take extraordinary measures. The economy was supported by numerous rate cuts and stimulus packages worth trillions. The result was an expansion of central bank balance sheets and greater levels of government debt. The reaction on the financial markets was euphoric. The measures put share indices back on track for success, and Wall Street even hit new highs. The movements on the equity market were inconsistent with the situation in the real economy, though: unemployment rates shot up, companies got into trouble and growth forecasts were revised downwards.

What was distinctive about last year?
LC: The interventions by the central banks were definitely exceptional. The balance sheet of the US Federal Reserve swelled from USD 4,200 billion in January 2020 to over USD 7,300 billion. The European Central Bank was also obliged to intervene on a large scale. Its balance sheet grew from EUR 4,690 billion at the start of 2020 to over EUR 7,000 billion at the end of the year. Other asset classes witnessed exceptional events too: the price of a barrel of oil fell into negative territory for the first time, for example. Demand for black gold declined sharply as the economy shut down all over the world. That resulted in excessive inventories, which in turn put pressure on the oil price. In April 2020, buyers of West Texas Intermediate on the futures market did not have to pay for oil but actually received up to USD 38 per barrel on occasion.

Fear and greed will once again further accentuate the trends on financial markets in 2021. There are volatile times ahead.

How do you think the market will perform in 2021?
Mario Geniale (MG): Expectations for equity markets are very high. Prestigious firms like Goldman Sachs are forecasting that the S&P 500 index will be 18% higher a year from now. Continued loose monetary policy and more aid packages could boost investor sentiment even further. But the Covid-19 crisis and its impact are not fully quantifiable, which will result in a degree of volatility again in 2021. Fear and greed will once more further accentuate the trends on financial markets in 2021. We see potential for the SMI to rise by 8–10%.

Which three equities in the Swiss Market Index would you buy for 2021, and which would you avoid?
MG: In our view, Partners Group is likely to continue to benefit from the investment crisis and improved market sentiment. The current sector rotation out of “coronavirus winners” into the “losers” may produce some very attractive opportunities to buy high-quality shares that have previously had very aggressive valuations, such as Lonza. A global economic recovery is likely to cause cyclicals such as Swatch to rise sharply. We generally prefer to avoid banks, as their problems (negative interest rates, falling margins, etc.), are set to continue. We are also negative on Swiss Re, since the dividend is once again being paid out of reserves, and Givaudan, where an estimated P/E ratio of 36 for 2021 is a huge overvaluation compared to the growth potential.

The gold price rose by 25.2% in 2020. What performance do you expect this year?
MG: We recommend holding a substantial position in gold in securities portfolios as a low-cost hedge against unforeseeable events. Given the unprecedented monetary policy being pursued by central banks and the explosion in debt, how the economy will do over the next three to five years is highly uncertain. Only one thing is for sure: whenever there is any turbulence, gold will continue to live up to the reputation it has earned over the past thousand years as the hardest currency in the world.

Where will the SMI be twelve months from now?
MG: We remain confident that the SMI can reach 11,700 this year. Depending on precisely when this level is hit within the next 12 months, investors should reassess their equity weightings and take some profits.

In light of global uncertainties, we recommend high-quality, volatility-resistant securities. Unlike high-beta stocks, such securities prove more defensive in a crisis.

Is there anything else the financial markets are concerned by at present?LC: The yield on government bonds is too low. That raises the question of whether they still belong in a portfolio. Our view is that, despite their negative yields, government bonds form an essential part of a balanced portfolio. They reduce volatility and stabilise performance. Even though it looks like the equity market is a one-way street at the moment, every bull market comes to an end eventually. Government bonds are the ultimate anchor of stability, provided investors do not compromise on issuer quality. Maturities should be spread over the short to medium-term part of the spectrum.

Commitment
Young Stage

A tradition of commitment

As a bank rooted in the cooperative movement, we have been demonstrating our social commitment for many years. Our long-term aim is to make a positive contribution to cultural life in Switzerland and support the less fortunate among us through our commitment.

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At this point we would like to show you a few examples of how we live up to our social responsibility in a way that is sustainable and holistic:

International Circus Festival YOUNG STAGE Basel

Needless to say, even in challenging times we pay more than just lip service to our values such as commitment and reliability, fairness and partnership: we live them out. So we did not hesitate to extend our long-standing commitment as Presenting Partner to the famous YOUNG STAGE circus festival in a year when the festival could not even take place owing to the coronavirus pandemic. YOUNG STAGE not only encourages the artistic skills of the younger generation, it also provides a platform where professional artists can establish themselves with the major promoters to celebrate long-term success.

Magic Lamp Foundation

Magic Lamp Foundation

We have been supporting the Magic Lamp Foundation since 2020. The charity makes the wishes of sick children come true. The experiences are customised and unique and allow children, teenagers and their families to enjoy happy and carefree moments. It was particularly difficult for severely ill children and teenagers to take part in social and cultural life in 2020 due to the coronavirus. The Magic Lamp Foundation adapted to the situation and made wishes come true online, for instance a video conversation with the comedy double act Divertimento including a spontaneous show segment, a virtual meeting with a patrol of Swiss pilots and a walk with Anuk Steffen, who plays the role of Heidi, on location where the film was shot. Since 2001 when it was set up, the team at the Magic Lamp Foundation have made more than 2,000 different wishes come true. We are delighted to be able to help finance more wishes.

The DreamTeam at FC Basel 1893

DreamTeam FC Basel

We support a special team at FC Basel 1893, the FCB DreamTeam. This was founded over 20 years ago with the aim of making it possible for people with a mental or physical handicap to play football and take part in the life of the club. There are currently four teams engaging in the sport weekly; they take part in around six tournaments and have special training sessions with FCS stars like Elisabeth Mayr (FCB NLA women’s team) and Taulant Xhaka (FCB first team); they also do joint activities next to the pitch. They not only train for fitness, they also gain practice team spirit, partnership and taking decisions. The highlight for the 70 or so participants is the annual DreamTeam Whitsun Tournament, with ten teams from Switzerland and Germany. We are proud to be acting as Presenting Partner from the 2021/22 season for this unique team, with their emphasis on enjoying life and taking delight in team sport.

​New Heart Foundation

New Heart Foundation

The New Heart Foundation is engaged in a place almost no-one ever thinks about: it supports children from the poorest backgrounds in Malindi, a city on the coast of Kenya to the north of Mombasa. These children cannot count on a decent education or a warm meal. Bank CIC and the Les Amis de New Heart Foundation support children in Malindi who do not have enough to eat and cannot go to school. By building and running a primary school and hostel we are contributing to the fight against hunger, poverty, illiteracy and hopelessness. We are trying to give the children of Malindi prospects of hope for the future. Around 30 children from the poorest families are fed and taught here. The goal is to ensure that they and their children do better than the generations that came before them.

Staff show their commitment

Stiftung Pigna

The experience of recent years, when Bank CIC has given staff the chance to take part in various charitable campaigns, again motivated employees at the Zurich branch in 2020 to abandon the world of finance for a day and offer their skills to the Pigna Foundation. This is a charity that supports, looks after and employs people with a disability in its living, working and residential premises in Bülach and Kloten. At the workshop in Bülach, Bank CIC staff helped to make Christmas presents: textiles were printed, strings tied, boxes folded and a great deal of laughter shared with the workers with disabilities from the Pigna Foundation. The CIC staff described the day as a very enriching encounter. They appreciated working with people who face challenges in life that are different from those of a bank employee. The interaction and mutual recognition of work well done was an unforgettable experience for the colleagues in the Zurich branch and a good example of the social commitment shown by the employees of Bank CIC.

To find out more go to cic.ch/engagement

Corporate philosophy

You have an entrepreneurial approach, so do we

Over 400 staff deal with your issues like entrepreneurs, and with an appropriate degree of flexibility and client focus. We are organised with a clear structure and flat hierarchies. This allows us to take rapid decisions so we can offer our customers added value that helps them achieve their goals. Our attention is always focused on the needs and requirements of our clients.

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Vincent Gygax

“It takes more than extensive knowledge of financial, tax, operating and legal issues when it comes to corporate takeovers; for a sale or purchase to be successful you also need sound instincts, an understanding of what the parties need and a professional assessment of the market and of what is possible.”

Vincent Gygax
Head Corporate Finance, Neuchâtel

Sandra Marugg

“To be able to anticipate reforms that are needed and implement them as part of our strategic focus, we draw up change and innovation processes that are closely supervised. We tackle transformations together and in a structured manner: Bank CIC attaches great importance to client focus and flexibility.”

Sandra Marugg
Head Change & Innovation Management, Basel

Andreas Dill

“Thanks to our large network and outstanding services, like documentary transactions and the ability to hedge imports and exports, we can operate on an international scale without losing personal contact with our clients.”

Andreas Dill
Head Large Caps German-speaking Switzerland and Ticino, Basel

2020