Annual Report Financial Year 2020 Close to You
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Annual Report Financial year 2020 Close to you. Zürcher Kantonalbank celebrated its 150th right assistance to those who needed it. anniversary in 2020. We have always seen We took responsibility and demonstrated in ourselves as an element that establishes a no uncertain terms that the people and link between business and society, town and businesses of the Canton of Zurich can count country, tradition and modernity. We had on us. Together Zurich. planned anniversary activities under the motto “Zäme Züri” (Together Zurich) to put 10 – 15 this deep sense of solidarity on display. 150-year history: The coronavirus crisis forced its own agenda A special bank on us instead. Although we had to cancel the festivities, we still expressed our solidarity 34 – 45 with the canton in a way that could hardly Zürcher Kantonalbank and its public service be more in line with this motto. Our proximity mandate in the current environment to Zurich’s business and political communities 72 – 91 enabled us to act swiftly and get just the Bank for SMEs Key figures (group) Change 2020 2019 in % Key figures in % Return on equity (RoE) 7.2 7.2 Cost / income ratio (CIR) 1 60.12 59.9 Common equity Tier 1 ratio (CET1) (going concern)3 17.4 17.7 Risk-based capital ratio (going concern) 3 18.9 20.0 Risk-based capital ratio (gone concern) 3 3.2 1.4 Leverage ratio (going concern) 3 6.2 7.0 Leverage ratio (gone concern) 3 1.1 0.5 Liquidity coverage ratio (LCR) 4 160 123 Income statement in CHF million Net result from interest operations 1,218 1,216 0.2 Result from commission business and services 806 777 3.8 Result from trading activities and the fair value option 459 319 43.9 Other result from ordinary activities 29 102 – 71.3 Operating income 2,513 2,414 4.1 Operating expenses – 1,580 – 1,443 9.5 Value adjustments on participations and depreciation and amortisation of tangible fixed assets and intangible assets – 117 – 113 3.6 Changes to provisions and other value adjustments and losses – 14 – 12 23.6 Operating result 801 846 – 5.3 Extraordinary result 25 4 525.3 Changes in reserves for general banking risks 46 – n.a. Taxes – 8 – 5 50.6 Consolidated profit 865 845 2.4 Balance sheet (before appropriation of profit) in CHF million Total assets 188,364 167,054 12.8 High-quality liquid assets (HQLA) 4 53,042 43,679 21.4 Mortgage loans 87,679 84,311 4.0 Amounts due in respect of customer deposits 92,609 85,089 8.8 Provisions 222 242 – 8.0 Equity 12,650 12,337 2.5 Customers’ assets in CHF million Total customers’ assets 361,658 333,341 8.5 Headcount / branches Number Headcount after adjustment for part-time employees, as at the reporting date 5,180 5,145 0.7 Branches 5 60 66 Corona- Anniver- Profit distribution in CHF million Ord. virus Total Ord. sary Total Share paid to canton to cover actual costs 11 11 – Dividend for the canton 230 6 678 297 2306 1007 330 – 10.1 Dividend for municipalities 115 6 338 148 115 6 507 165 – 10.1 Total 345 100 456 345 150 506 – 9.9 Additional compensation for state guarantee 23 22 3.9 Additional payments from public service mandate 126 125 1.1 Rating agencies Rating Fitch AAA AAA Moody’s Aaa Aaa Standard & Poor’s AAA AAA 1 Calculation: Cost / income ratio (excl. changes in default-related value adjustments 4 Simple average of the closing values on the business days during the quarter and losses from interest operations). under review. 2 Excludes the CHF 46 million non-recurring personnel expense related 5 Including branches of Zürcher Kantonalbank Österreich AG in Salzburg and Vienna. to the anniversary payment made to employees. 6 Ordinary dividend. 3 In accordance with the provisions for systemically important banks. 7 Anniversary dividend. 8 Special coronavirus dividend. E_01_ZKB_Berichtsteil_2020 (Layout) [P]_3731269.indd 4 18.03.21 19:13 Group structure Zürcher Kantonalbank (parent company) Key group figures and group structure group and figures group Key Zürcher Zürcher Swisscanto Kantonalbank ZKB Securities Kantonalbank ZüriBahn AG Holding Ltd. Finance (UK) Ltd. Österreich AG (Guernsey) Ltd. Swisscanto Fund Management Company Ltd. Swisscanto Pensions Ltd. Representative Offices Swisscanto Asset Management International S.A. São Paulo Beijing Mumbai Singapore Group mission statement Our vision Close to you We support, advise and offer solutions. Always, everywhere. Throughout your life. — No. 1 in the Greater Zurich Area — Nationally strong — Internationally successful Our goals Powerful Swiss universal bank — Happy clients — Committed staff — High financial security — Sustainable success Our values Inspiring Motivate, think ahead, show courage Responsible Be reliable, create value, be present Passionate Be involved, enthuse, persevere Our roots The bank of the people of Zurich — For the population and the economy — Continuity in business policy — Economic, ecological and social engagement E_01_ZKB_Berichtsteil_2020 (Layout) [P]_3731269.indd 3 18.03.21 19:13 AWU Focus Report 2020 Zürcher Kantonalbank and its public service mandate in the current environment Coronavirus lending Jörg Müller-Ganz: “The key was to launch something new.” Outlook Focus on SMEs Looking for the silver lining 34 41 One central factor that led to the estab- Bank for SMEs lishment of Zürcher Backbone of business and society Kantonalbank was the Facts and figures need to address the Jürg Bühlmann: banking requirements “Clients don’t forget of tradesmen and this kind of reliability!” small businesses. We Employee portraits have been living up 72 to this claim for over A passion for ice cream making 150 years – and also 77 took this responsibility seriously in 2020, which proved to be a challenging year for our SME clients. See our focus topic to find out more about us as a bank for SMEs in the A reliable succession Greater Zurich Area. 83 E_01_ZKB_Berichtsteil_2020 (Layout) [P]_3731269.indd 4 18.03.21 19:13 Contents 6 Letter from Jörg Müller-Ganz 8 Letter from Martin Scholl 18 In brief 26 Management Report 103 Corporate Governance 125 Compensation Report 136 Financial Report 234 Glossary 238 Index 241 Branches 244 Contacts E_01_ZKB_Berichtsteil_2020 (Layout) [P]_3731269.indd 5 18.03.21 19:13 6 Zürcher Kantonalbank Annual Report 2020 Dear residents to provide support for structurally intact SMEs. Together with the head of the of Zurich, Zurich Department of Finance, we played a leading role in devising and implement- ing the cantonal aid package for SMEs Covid-19 dictated the agenda in every and start-ups and helped shape the federal area of our lives: in politics, society, health, response programme, under which we business, culture, sports and in private. granted nearly CHF 1 billion in Covid-19 Terms used either infrequently or not at business loans last year. We also launched all just one year ago like “contact tracing”, a programme last year that provided an “herd immunity”, “mandatory masks”, additional CHF 300 million in liquidity “social distancing”, “reproduction num- bridging loans for viable companies. We ber” and “risk group” now stand for made a promise to our more than 150 spon- painful, restrictive precautionary meas- sorship partners from the realms of cul- ures that dictate our everyday lives. It goes ture, sport and society that they would without saying that Zürcher Kantonal- continue to receive the agreed contribu- bank was affected by this pandemic as tions for 2020 and 2021, even if they were well. Within just a very short space of time, unable to provide any services. We also countless measures had to be devised granted funds to help promote the integra- centrally and implemented decentrally tion of around 1,300 unemployed young to keep the bank up and running. Internal people. And finally, in view of the result- processes needed to be adjusted in ing economic environment, the Board of response to ongoing assessments of the Directors declared an additional special situation, remote access to computer coronavirus dividend of CHF 100 million systems had to be expanded considerably for the canton and the municipalities. so that up to 70 percent of employees Zürcher Kantonalbank has already weath- could efficiently work from home, 49 of ered several crises and the diverse range our 64 branches were temporarily closed to of support measures that took the place of ensure our long-term personal contact the bank’s anniversary year celebrations – with clients, and digital channels needed which where cancelled on account of to guarantee the bank’s constant access- the pandemic – is the very best vindication ibility to clients, to name but a few. of the bank’s purpose, something it has Of course, as a cantonal bank with a been fulfilling for 150 years now. public service mandate, the focus was The past year was not all about the on the bank’s legal purpose, which is “to crisis, though. We continued to develop the contribute to efforts to resolve economic bank according to plan, based on our and social issues within the canton”. Even long-term strategy, and took responsibility before the Federal Council decreed the for resolving economic, environmental lockdown, we set CHF 100 million aside and social concerns. As a pioneer in the E_01_ZKB_Berichtsteil_2020 (Layout) [P]_3731269.indd 6 18.03.21 19:13 Zürcher Kantonalbank Annual Report 2020 Letter from the Chairman 7 area of sustainability, we are setting trends through our commitment to the Paris Climate Agreement in actively managed, traditional investment products and by training 100 employees as ESG analysts. We are breaking new ground with the launch of “frankly”, a programme designed to raise awareness among the people of Switzerland about private pension provi- sions and make it easier for them to take responsibility for building their own retire- ment capital.