Switzerland: Financial Sector Stability Assessment; imf country Report 14/143; April 16, 2014

6. Swiss banks’ profitability has recovered sharply since the crisis, but the income mix 
has changed. Historically low interest rates and the flat yield curve have since 2008 narrowed 
interest margins and reduced the contribution of net interest income to gross income. This is more 
than offset by a more than doubling of fee-based and trading income.
0
20
40
60
80
100
120
140
160
1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
0.0
0.5
1.0
1.5
2.0
Ma
r-
70
Sep
-7
2
Ma
r-
75
Sep
-7
7
Ma
r-
80
Sep
-8
2
Ma
r-
85
Sep
-8
7
Ma
r-
90
Sep
-9
2
Ma
r-
95
Sep
-9
7
Ma
r-
00
Sep
-0
2
Ma
r-
05
Sep
-0
7
Ma
r-
10
Sep
-1
2
Owner occupied apartments
Single family houses

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SWITZERLAND
12 
INTERNATIONAL MONETARY FUND
7. The insurance industry is in a transitional phase in a challenging low-rate 
environment. Life insurers struggle and some take excessive risks as yields on safe assets are very 
low. The business performance of non-life insurers is better than that of life insurers, but 
competition is high.
8. Historically low interest rates and abundant liquidity are fueling house price 
appreciation, heightening vulnerability to price corrections, and interest rate increases. There 
is evidence of bubble-like dynamics in some regions and market segments, raising concerns about 
overly leveraged borrowers and growing bank exposure to the risk of a price correction or an 
interest rate increase.