Okay. Good morning, everybody. Pascal Kiener, CEO of BCV speaking. Let me jump directly on page four to comment what I consider are the key messages of our H1 results. Basically, BCV is doing quite well with a continued growth in all business sectors. Revenue are slightly up despite the negative or the low interest rate environment, due to our business model, which is quite diversified. The most diversified in terms of revenues of all cantonal banks, due to private banking and asset management. In this uncertainty world and also in this environment of, let's say, very low interest rates, we try to master and to control very tightly our cost.
You see that the overall cost, meaning personal cost, operating expense, as well as amortization, are up only 1%. Basically, this result in a net profit up 5% compared to last year, CHF 225 million. I go directly on page six. You see the different business volume, mortgage, other loans, deposits. So everything is up. In terms of deposit, you have to add the two elements, site deposit and other client deposits. In aggregate, this is +3%.
Okay. In terms of rating, being financial or extra-financial, ESG ratings, financial rating, Moody's and S&P have confirmed their rating, which is okay. We didn't expect anything else, but I think it's good to say that. In terms of ESG rating, you see that the notation, the ratings of BCV are quite good. Very often on the second highest rating for the different agencies and almost everywhere, the best cantonal bank or among the best in terms of extra ESG rating. This is basically the result of a long-term focus on governance issue, durability.
This has not started in the last three, four years, but we started before 2010. Basically, it's written in the cantonal law about BCV that we should care about durability on such issues. Now back to business. Retail banking, you see that the volumes are up, which is a normal growth. We have a target of roughly 4% for the mortgage business on a yearly basis, 2% we are on track, and customer deposit, this is good. We were surprised by this number. I was expecting a bit less, but this is good. In terms of revenue, I think profit, this is due to the internal transfer pricing model.
You know that for the time being, the savings, I mean, the zero interest rates, basically, is not really favorable for the retail banking. Basically, the profit goes to the corporate center. Okay, corporate banking. Here, we have always to differentiate a different segment. You have the small, medium enterprise. Focus is canton Vaud, 2% loan up and deposit stable. The point I would like to make here is the COVID-19 bridge loans.
I hope you're all familiar with what it was. It was a facility offered by the Swiss banking system, or banks, to cooperate in Switzerland, where the banks would provide the liquidity, but the risk would be taken by the Swiss Confederation. This started during the COVID crisis. Now a couple of years later, what can we say? We can say that 93% are paid back, 83% by the customer and 8% by the guarantee cooperative, which is basically an extension of the Swiss Confederation.
Now, why I am mentioning that, because if you assume that the 7% between the 93% and 100% would also be completely lost, not for BCV or for banks, but for the Swiss Confederation, that would add up 8% + 7%, 15%. When the program was developed a couple of years ago, we assumed 20%-25% loss. That means, basically, that the Swiss economy and Vaud, I think those numbers are the number for Vaud, but this would be very similar in other cantons. The Swiss economy is doing quite well, has been doing well in the last five to six years because all those companies were able to pay back their loan, 85%, at least, probably more.
I do not expect that the 93%- 100% or the 7%, the rest 7% would all be lost, probably 5% out of 7%, but not more than that. That shows that the economy is doing not too badly. Real estate is up. Large corporate, this is always up and downs, depending on pricing and depending also on the window dressing end of June. Trade finance, maybe one comment here. The geopolitical issues, and here we are still very, let us say cautious, prudent in this area, even more after the geopolitical troubles in the Middle East.
So we do not expect to grow this business in the next two to three years, unless suddenly the U.S.-Iran war is solved, which I do not believe, and the same for the war between Russia and Ukraine, which also do not believe that it will be solved in the next, let us say, one to two years. In terms of credit risk, again, this is the same story as for the COVID bridge loan. The economy is quite resilient. We are very limited number of new provision of new credit risk for the SME business in the canton Vaud or the corporate business in the Swiss overall, sorry.
Wealth management, again, those are aggregate figures. Here you have the private banking of the mother company. You have also the institutional asset management business of the mother company. You have Piguet Galland, which is our small subsidiaries focused on private banking, and also Gérifonds, which is a kind of fund administration company. So those numbers, in a way, they are all up, but we should give more detail, but we do not want to give to be able to assess exactly what is going at each level. Anyway, trading, slightly up, CHF 35, CHF 36. This is more or less the same. Again, I repeat, this is a client-induced trading, customer-induced trading. There is no prop trading here.
This is mostly Forex and also a strong expansion in the structured product volume. This is clear that our rating, S&P and Moody's rating, helped quite a lot in terms of being able to sell structured product to customers, being retail customers or private banking customers or external asset manager or other small banks. Okay. That was for, in a way, the business part. I hand over to Thomas for the financial results in detail.
Okay. Hello, everybody. That will be very short. On page 13, you see that basically, the total income up CHF 14 million, allowed operating profit to go up CHF 12 million because of careful cost management, firm cost management. We will come back to that point. Nothing particular to signal with net profit up +10.5%. On page 14, in different sources of income, which Pascal already described quite well, we only had reverses on loan impairments, as we had in S1 2025. On page 15, we give again the full transparency to understand net interest income, where you see that the economic net interest income is CHF 315 million + CHF 2 million, and the balance sheet management is up CHF 1 million- CHF 10 million, which is basically the arbitrage, you know.
We also know that this net income from BSM creates charges on the accounting net interest income and generates income on the trading line. So taking it this correct way, the income, which is then really can be allocated to trading activity without BSM, is up CHF 1 million to CHF 55 million from CHF 54 million. As mentioned, operating expenses in the broader sense, meaning including depreciation, amortization, is, we could say, almost stable. Personnel costs evolve with salary increases. Other operating expenses are slightly up with operating costs of infrastructure and software licensing, software IT maintenance expenses.
As I explained last year to you, we see now the amortization going slightly down. Nothing to signal on the headcount, which is stable at the mother company and its subsidiaries. Total assets, while the mortgage loans and other loans have already been described by Pascal, you see that we continue to invest into financial investments, which are HQLA, as a liquidity reserve. On page 19, liabilities. The customer desktop deposits are up CHF 1.1 billion.
Actually, it is important to notice that this is a net increase. There is one big actor, which actually has been withdrawing a lot of their deposits. So it is even more pleasant to see that net customer deposits are up CHF 1.1 billion. With the financing, be it over the Swiss Pfandbriefe , or our own bonds, work really well, so we increase here by CHF 0.7 million. I have said CHF 0.7 billion, CHF 700 million, and, well, you know the accounting game of first half year, which shareholder equity only reflecting, well, half year result and full year dividend payments. Well, we see assets under management.
So we are at CHF 142 billion, which 2/3 of this increase is market performance. So we are quite happy to see that at the end of the half year, because, remember, in the middle of March, April, this was not sure. But there was a good effort and a good result in net new money, in different areas from individuals, SMEs, institutionals.
So we saw, overall, good market development, good work at the front level. The capital ratios, they are detailed on page 21, and as already mentioned, we had strong increases in the mortgages, and so obviously this costs risk-weighted assets, and so it has a slight decrease on the CET1 ratio. Nothing particular on the leverage ratio. LCR on the page 22, and then NSFR on the page 23, continue to evolve at reasonable and comfortable level. So this is safe. That is all I want to say. I am looking forward to your questions. Pascal?
Okay. Let me finish this presentation by going on page, I am looking for the number, on page 25. Basically, how do we see economically going forward? We are still, let's say, not optimistic. That would be too much, but we do not expect any recession or on growth below 1%, maybe very close to 1% this year and probably slightly better next year. Basically, the Swiss economies are resilient. They have proven in the past, for the last 20 years, that they went through all those crises without too much damage. Now it is clear everything depends a bit on the U.S. trade policy.
We do not know exactly where we are. We are at 39%, that it went down to 15%, so I am a bit lost here. I cannot really follow exactly what is going on. I think there are still some negotiation going on. Depending on the geopolitical situation, the Swiss franc might increase, and this is not very good for exporter, of course. One of the main business is real estate. The mortgage business, basically it carries on like that for the.
It is same story as, let's say, the year previous, or two years ago, three years ago. Basically, we have an ongoing growth of population driven mostly by immigration, which means something like between 1.5% increase. We cannot build enough flats or houses. Basically, the result is the vacancy rate going down. You see the number 0.87, and we expect this dynamic to carry on for the next two to three years, because I do not expect anything different in terms of immigration, given the employment rate in Switzerland and given the situation of our main neighbor. Okay, that is it, and we are ready to answer your questions. Thank you.
Thank you. If you have joined us via Teams and would like to ask a question, you may use the raise hand function. If you have joined us via the telephone lines today, you may press star followed by one on your telephone keypad. We have a question from Stefan Michael. Please unmute locally and proceed with your question.
Yes, good afternoon. Thank you very much for the event and for taking my questions. I have two, please. The first one is on the wealth management deposits, which showed very good momentum, up about 10%. Is there anything particular to highlight? Is anything driving this? Have you offered particularly good rates, or is it coming with the net new money inflows, or is it a change in investment behavior? Are clients moving into more cash and less securities?
Would be grateful if I could add a bit of color on these wealth management deposit flows. Also the risk-weighted assets. They are now up about 5%, almost 5% year-on-year compared to mid-2025. Is that something that is reasonable to expect to continue, or is there anything that would make you think that maybe risk-weighted asset growth will be slower than this 5% in the last 12 months? Thank you.
Okay. Concerning the first question, wealth management, there are different elements. I think one element, maybe one of the main driver is basically the growth in the institutional asset management business. You know that there is one competitor less, which is Credit Suisse. So pension fund in Switzerland, especially in the French part of Switzerland, used to have three to four banks, being Credit Suisse, UBS, Pictet, or Lombard Odier, and BCV.
Basically, the UBS and Credit Suisse are together now. So that means that those pension funds try to diversify their banks, and we were able to capture part of that. This is an ongoing process because it's not like private client that after the merger of Credit Suisse or the Credit Suisse- UBS, a pension fund could decide very quickly to reallocate their wealth or their funds. In pension funds, this is different. It takes time.
You are a Board member that needs to discuss the whole thing. This is going on. In terms of private client, this is done. We were able to capture some new customer, some new fund from this merger two years ago, but that is done today. But for the pension fund, this is still ongoing, and we expect, for the future, to take advantage of this merger a bit more. That is for the wealth management.
Okay, Stefan, with regard to your risk-weighted asset question, there are two elements which have been driving risk-weighted assets if you take a 12-month period. One being, of course, the continuous growth in particular mortgages. Secondly, we have an in-driving cost of financing mortgages is that, the Pfandbriefzentrale, right? Basically, the last decade, every five years, it needs to increase its capital. This happened in the second half of 2025 and created additional negative impact of CET1 of about a 0.2%. Which means basically that the risk-weighted assets growth over the last 12-month period is above of what you should expect with regard to the mortgage growth over the years to come. Does it answer your question?
Great. Yeah, that is very helpful. Thank you very much.
Okay.
Thank you. We have a question from the telephone lines from Andreas Venditti from Vontobel. Your line is now unmuted. Please go ahead.
Yes, thank you very much for taking my questions. Maybe firstly on the cost side, the insourcing of the IT, we had some impacts on the cost, on the depreciation line and on the G&A. Is that process now over? Is this what we saw in the first half now a normal run rate, or shall we still expect some impact from this movement?
Then maybe, in general, in the various businesses in the canton of Vaud, you mentioned one impact on deposit growth from this UBS, Credit Suisse situation. Maybe you could comment a bit on the behavior of your competitor, what you see in the market, and what's going on there in terms of competition. Maybe, you mentioned yourself, you should give a bit more detail on the wealth management segment because it's so diverse. Maybe you could just highlight a few points there. Thank you.
Okay. So IT. No, I think the bulk of this integration of our IT activities, this is done. Do not expect much more here. This is done. Your second question was the competitive situation. It is always difficult to talk about competitors. You see, the situation has changed for every canton in Switzerland. You had two large banks, the cantonal banks and Raiffeisen. Today, there is one competitor less, and the behavior and the competitive situation depends a lot on UBS. For the time being, they are quite aggressive in the market.
They want to rebuild market share, which I could, in a way, understand. So it is tough, especially in the mortgage business. In the wealth management business, there are a bit more competitors like Pictet, Lombard Odier in Lausanne. But maybe for us, the main competitor is UBS, and they are stronger than before since they are a bit bigger. Okay, I cannot comment any longer. We keep our market share. We want to grow with the market in the credit business, in the mortgage business. You see in the mortgage business, we have more than 30% market share, so it is quite difficult to get much more.
In the retail business, probably we are between 45%-50% market share, so also it is difficult to grow faster than the market. In the SME business, in the credit SME business, there is no official number, but we have some estimation, internal estimation, showing that we are between 40%-50% market share. Basically, again, it is difficult to grow much faster than the market. Okay, and the last question was giving more information. No, look, we do not want to give more because it will be very complex.
What I can tell you is that all entities, I mean, Piguet Galland, the mother company, Gérifonds, all doing quite well. Where we are a bit more this year than, let us say last year, is basically this institutional asset management where we could gain some new money of pension fund that diversify their portfolio. They split their asset among three to four banks, and here we could take advantage of the merger, UBS- Credit Suisse.
Thank you.
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Good afternoon. I have a question regarding, again, the topic of net new money and deposits. If we exclude the increase in deposits and the cash from the net new money, is it a good normal growth rate for the core asset management business or how do you see the moves there going forward?
No, you're right. It's a normal growth. Nothing special.
Actually, the quite good net new money was mainly driven by the effects that you mentioned before on the wealth management, extra deposits.
Yeah, the bulk is that. There are some other small things, but the main part is what I mentioned. Exactly.
Perfect. Many thanks.
Thank you.
Thank you. At this time, we currently have no further questions, so I will hand it back to the management team for any further remarks.
No, I would like to thank you all very much for attending this conference and Q&A session. We see you probably in February next year. Bye-bye. Thank you.
Thank you. Bye-bye.
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