More stable interest income through refin­an­cing diver­si­fic­a­tion

The white paper exam­ines the impact of a diver­si­fied funding mix on interest income. In partic­u­lar, the unex­pec­ted increase in customer depos­its at cantonal banks during the Credit Suisse "bank run" in the fourth quarter of 2022 serves as a basis. Instead of exer­cising prudence in a first step and alloc­at­ing a portion of these newly acquired and poten­tially unstable inflows to high-quality liquid assets (HQLA), a large part of the depos­its was used to refin­ance new loans. Constant pres­sure on prof­it­ab­il­ity led to a real­loc­a­tion of HQLA posi­tions toward finan­cial assets. Main­tain­ing a diver­si­fied funding port­fo­lio can not only mitig­ate the reduc­tion in liquid­ity when depos­its are with­drawn, but also help stabil­ize prof­it­ab­il­ity and, in conjunc­tion with a sound invest­ment strategy, gener­ate higher risk-adjus­ted returns.