Private banks are growing, but pressure on margins is mounting

With assets totalling 3.5 trillion Swiss francs, Swiss private banks are set to reach a new asset high in 2025. At the same time, rising costs are eating into profits, particularly at medium-sized institutions. This is increasing the pressure for consolidation in a key part of the financial centre for wealth management.

According to available figures, Swiss private banks managed around 3.5 trillion Swiss francs in 2025 – more assets than ever before. For the financial centre, however, this record figure is not purely a measure of success. This is because, alongside this growth, margins are coming under pressure, particularly at medium-sized firms. It is precisely in these firms – where scale is often not yet sufficient to support technology, regulation and sales – that costs are rising faster than revenues.

The core message of the new industry study is therefore clear: more assets under management do not automatically mean better profitability. Net new money of 96 billion Swiss francs and a positive performance contribution of 81 billion Swiss francs did indeed boost the volume significantly in 2025. However, rising costs and lower interest income have weighed on profitability. Industry turnover rose only slightly to 21.6 billion Swiss francs, whilst the cost base grew more sharply.

Medium-sized banks under pressure
Particularly striking is the slump among medium-sized institutions. Their profits fell by around 46 per cent in 2025. At the same time, the median cost-to-income ratio in the sector rose from 75.6 to 78.2 per cent. For the market, this is more than just a banking story. Pressure on business models, locations and economies of scale is mounting. Any institution unable to spread the burden of additional regulation, IT expenditure and process re-engineering across greater volumes will more quickly become a takeover target.

Consolidation has therefore clearly gathered pace. By 2025, the number of private banks in Switzerland had fallen from 85 to 80 institutions. By the end of May 2026, it had fallen further to 79. This continues a trend that was already evident in last year’s study. Even then, it was expected that the number of institutions would fall below 80. For traditional wealth management centres, this means fewer independent platforms, more mergers and fiercer competition for advisers, client funds and operational efficiency.

AI remains a structural issue for the time being
For the first time, the use of AI is also coming to the fore. Many institutions are testing applications to boost productivity, but the business impact remains limited for the time being. Only a small proportion invested more than 500,000 Swiss francs in AI in 2025, and the majority do not expect any measurable savings or additional revenue in the short term. For the sector, this means that whilst the technology is reshaping the strategic agenda, it does not yet solve the current profitability problem.

For the property sector, the issue is relevant indirectly. The Swiss financial centre remains a key location factor for high-quality office space, urban service clusters and wealth-related ecosystems. If the private banking landscape continues to consolidate, this will not immediately change the market, but in the medium term it will shift the requirements regarding size, location and operational infrastructure at the leading financial centres.