A new study by consultancy PwC shows that in 2024, every peer group of Swiss and Liechtenstein private banks recorded double-digit growth in assets under management (AuM). Among the 74 banks analysed, PwC classifies small banks (AuM < 5 billion francs), mid-sized banks (AuM 5–50 billion francs), and large banks (AuM > 50 billion francs).

The main growth engines were buoyant markets and investor optimism, especially in the US. All banks benefited from positive market moves, and several reached record client-asset levels. The strong market confidence in 2024 also triggered robust net new money (NNM) inflows.

Large Private Banks Lag Behind

For the first time, large private banks managed a combined 3,025 billion francs, passing the three-trillion-franc mark. Yet their NNM contribution to total growth was a relatively modest 2.2 percent. Small and mid-sized institutions posted markedly higher inflow rates of 4.5 percent and 4.9 percent, respectively.

PwC attributes the outperformance of certain banks to consistent strategic execution, successful «lift-outs» of clients from major banks, sharp business-model positioning, and a targeted geographical focus. Nonetheless, PwC notes that market turbulence in early 2025 has clouded the picture.

Inflows Expected to Moderate

Although private banks of all sizes should continue to attract net new money, PwC forecasts lower inflow rates, mainly because competition is intensifying. On the earnings side, 2024 marked a paradigm shift.

After surging interest rates powered strong interest income in 2023, the decline from March 2024 compressed margins. Fee- and commission-based business (Net Fee and Commission Income, NFCI) – traditionally the main revenue driver for private banks – moved back to centre stage. NFCI margins on AuM held steady, while absolute NFCI rose by 7-9 percent across all peer groups, largely offsetting lower interest income.

Small Banks Heavily Exposed to Interest Cycle

Over a three-year average, client deposits accounted for about 16 percent of AuM at small banks, 11 percent at mid-sized banks, and 10 percent at large ones.

That reliance on interest income is underscored by loan exposure: on average, loans represented 8 percent of volumes at small and mid-sized banks and 5 percent at large banks.

Margin Pressure Mounts

Since 2022, NFCI margins have been flat – a sign of growing price sensitivity among clients and intense competition.

At the same time, the industry faces structural change: higher IT spending, evolving client needs, digitalisation, and new regulatory demands weigh on traditional business models and lift operating costs.

Consolidation Not Entirely Negative

The number of banks focused on wealth management has fallen from more than 150 to fewer than 90 in recent years. PwC expects the tally to drop below 60 in the next few years.

Consolidation is not entirely negative, however: «Fewer but stronger banks will shape the market. The survivors have demonstrated their ability to adapt their business models successfully in a dynamic environment.»