Banque Cantonale Vaudoise

SIX:BCVN

Q2-2025 Earnings Call

[Operator]

Ladies and gentlemen, welcome to the BCV 2025 Half Year Results Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Pascal Kiener, CEO. Please go ahead, sir.

[Pascal Kiener, executive]

Thank you very much. Good afternoon, everybody. Welcome to our H1 results conference.

Let me go directly on Page 4, with 3 key messages, which I believe are the main points of this first half 2025. So basically, we have a growth in all activities in all client segments, showing that the war environment or the Swiss economy is still doing quite well. Stable revenue, I think this is the main point showing once again the good mix of revenues at BCV. So we are the Cantonale bank with the more diversified revenue stream coming from interest revenue commission and trading revenues.

And the third point is basically due to this good diversification of our revenues and a good grip on costs. We could achieve a CHF 250 million net profit, which is slightly less than last year, 3% less. But on the other hand, you member, '23 and '24 were 2 record years. So basically, this is the third record of BCV history at a semester. So nevertheless, I think a very good result given the current interest rate environment. Page 5, I'm not going to mention. Page 6, you see the different main line of business. So mortgage up. Commercial credit also 7%, deposit up, AUM also being the market performance as well as some net new money the minus CHF 185 net new money. This is basically 1 large corporate, which decided to withdraw some money temporarily for treasury purposes. So this is not a big issue at all.

Okay. Page 7, I'm not going to comment. Maybe 1 point. So we still have a very good rating, financial rating, as you know, as well as ESG rating. So you can see the number from themselves. I don't have any specific comment on this slide. Now let's go into the different business lines. So retail banking is doing quite well. As usual, with mortgage loan up. You saw for the overall bank is 2%, but for the retail banking part, it's 3%, which is good. That would mean something like 6% on an annual basis. I think, as you know, there was a merger between Credit Suisse and UBS. And this is also a consequence of that some customers are coming to us due to this merger. Customer deposit is the same. So this is also very good. The revenue and the operating profit, I mean, it's going up, but you have the effect of some transfer pricing. If you want some more information, you can ask Thomas later in the Q&A session to understand exactly the dynamic.

Okay. Corporate Banking, again, here I have to comment the different business line within this unit. So SME slightly up, but basically quite stable. And the COVID-19 bridge loans 85% or a bit more are paid off. So this means that at least for the first semester, the SME Vaud Canton, we are doing quite well. They were also cash [indiscernible] since the deposit went up 1%. Big real-estate firm, very stable, nothing to comment here. Large corporate is always a kind of a seasonal volatility. So nothing special also to comment on this side. Trade finance, we are slightly up, but at a moderate level. I mean you remember that we decided some years ago to decrease due to -- to decrease our volume exposure due to the geopolitical situation. And also, we had to withdraw from Ukraine and Russian business which were quite a good part of the trade finance. So basically, we still operate at a very moderate level, but we are slightly up during the semester compared to last year.

And again, the credit risk are still low. Now we don't know exactly what's going. Maybe we can talk about that later with the current U.S. tariff that went 4 -- on 1 of August. For the time being, we don't see anything. I don't expect any trouble in H2 2025 since it is new 2026, maybe more question mark. We don't exactly know. I mean the negotiation are still going on. So it's very difficult to assess seriously what it means. But we should also not dramatic situation. We're talking about roughly on average, 20% of the company who export to the U.S. So this is not a big number which means that there might be some difficulty, but that will be very, very limited on certain industries, on certain corporate. So I'm not worried for the economy as a whole due to this bad situation.

Wealth Management, I mean, the market, we are quite positive in the first half. So you see that in the number here. So nothing especially to comment here. And trading, I mean, due to these trends and some other issue, the volatility was quite high in the market, in the ForEx market. And of course, we could take advantage of that. The second good -- I mean, the reason for the increase is basically the structured products business also due to volatility in the market. We were able to define some product for specific customer and you see here the impact. So quite a good year or a good first semester for trading unit.

I'll hand over to Thomas for the financial part.

[Thomas Paulsen, executive]

Okay. Hello, everybody. I will be very brief on the first Chart 14. The key point you know is the stable total income and the operating net profit down by 3%. I'll just give more insight on what might surprise you on stable taxes. As a matter of fact, in 2024, we had some other income which was on the sale of a participation in a parking, which had no taxes on that line. So just to make sure to ensure you that we may still make our edge of core.

On Page 15, where you see these 3 sources of income. We have the interest income, which is down 8%. And I always like to look on the historic of the SNB interest rates. I mean it's just amazing to remember that first half 2024, SNB went down from 175 to 125 basis points. And this is really now far away we went down from 50 to 0 basis points over the first half. So you can see that the environment has dramatically changed. And you do just multiply the liquidity hold of the SNB and the short lag and you have already a strong interest income effect. So that's what's going on. Even though we do a good job on volumes with regard to mortgage volumes, which has evolved over the whole period from H1 '24 to H1 '25.

Nevertheless, it's down by CHF 22 million. Pascal mentioned that obviously, the environment was favorable for -- was good for commissions on wealth management, be it on valuations on transactions and trading outcome as well. I did see a little game for you with regard to what we are really in the interest income business from an economic point of view, being a net income before balance sheet management plus the balance sheet management. And well, I can answer it to your questions. But you see that this still is part of the game that we do this arbitrage to have interest -- supplementary interest income.

On Page 16, I mean the key point on that page is on the bottom of the page with loan impairment charges, which are basically negative. I mean there are reversals. That's why are positive. The -- it makes point, right? I mean our economic environment is positive. We might have a marginal increase in SME default rates. I've talked about margin. But at the same time, we have companies which were in impairment and which are back to the normal because they took a U-turn. So it's a positive development and positive market so far.

On Page 17, other operating expenses. I mean, -- so just to repeat 1 more time, we still had in the first half of 2024 for the first 3 months, the setup where IT hosting was with Kyndryl ex-IBM. Now the first half of '25 is fully integrated, and that explains why we have the swap or the switch from increased product costs and lower other operating expenses as we don't pay any fees anymore for an IT provider with that regard. Also with that regard, we had a slight increase half year against half year in depreciation which is a peak. And -- that's the point I want to make.

On Page 18, while headcount is evolved quite stably. With assets, while you can see that the loans and mortgages have evolved positively, Pascal handed it out. And we continue to build up our financial investments, which are only HQLA for LCR instead of having the money with BNS, we have here our AA, AAA bond portfolio. With regard to liabilities, you see the steady inflow in customer deposits. And as someone of you has pointed out, they have increased in quality. And we manage our NSFR. We manage our long-term financing. We continue to issue BCV senior bonds. We've continued to finance over the [indiscernible] and our needs were covered compared to a market which was more in transition with regard to funding spreads, the market has stabilized and the fund [indiscernible] does record issues in size.

Assets under management, yes, obviously, we had a positive effect of market performance of CHF 1.5 billion, and we had net new money in all business areas, nothing special here. On the capital ratios, obviously, this is a beautiful impact, which we preannounced basically, we prepare you that you would see a 1% increase. You see how prudent is our communication, right? It's a 1.4% increase due to Basel II. I remind you that we don't -- we're not hit by input floors or output floors given the prudent amortization of our models and the IRB scaler factor, which so far kind of provided prudence caution was taken out. So we are in the lucky middle. ATR is behaving nicely. NSFR as well which here precisely as you see that we structurally by purpose, right, seek to increase the length of our borrowing. And you can see the effect here. And also with regard basically, I should have mentioned to liabilities that we reduced borrowing from banks as obviously, you have seen. Thank you very much.

[Pascal Kiener, executive]

Good. So going forward, let's talk 2 seconds about the economy. First point, I think if you look at the Swiss economy, the fundamentals are very good, are still very strong, very low payment rates and recession under control. And basically, we have a steady population growth and inflow coming from other countries. So I'm quite very comfortable with that. Also those economies have proven their resilience during past crisis being COVID-19, the strong Swiss franc, the 2008 financial crisis, euro crisis. Now having said that, it's clear that the announcement of those U.S. tariffs at the level of 39% in addition to a decrease in the dollar of 10% is going to be quite tough for the corporate exporting goods towards U.S.

Now it's too early to be very clear about that. We understand the trend. It's clear that growth will be affected. It's also clear that those industries that will be -- that are concerned basically, there are going to be some difficulties, probably some companies going bust, why not and some employment. But my point is that it is quite limited. And there is still a negotiation going on for the whole, but also especially for the pharmaceutical industry. So it's quite difficult to assess. Now having said that, I'm quite convinced that there will be some problems if the tariff remains like that. But those will be marginal to certain sectors, certain companies. So I don't expect a recession in Switzerland due to that. I mean there might be other effect in the world economy. But if we talk about this aspect of U.S. tariff, probably, this is going to decrease growth by 0%, 3%, 4%. This is why you see those numbers 2025, 2026 estimate. Those are my numbers and not the official number, you can get different economic department in Switzerland.

We see -- I'm quite confident the economy is quite resilient. We are assessing that. But as I said, it's too early because they were introduced on August 1, but we are talking to those companies where we believe the situation might be more difficult. But for the time being, I have no, no bad sign. We'll see. You see all those companies are small SMEs. They are a way to go around. They will try at least. And since it is only, let's say, 15% to 20% of the export volume, they might also go to other markets. We'll see, but I'm quite confident that will not affect BCV in a very significant way.

Real estate still doing well. This is a key business for us. As you know, pricing are still going slightly up. Basically, with the demographics going up and interest rates going down, it's clear that the market will continue to be quite dynamic in terms of volume as well as price and you see also the vacancy rates going down for the fourth year consecutively.

Okay. That's it for me, and I hand over to the Q&A session. Thank you very much.

[Operator]

[Operator Instructions] Our first question comes from Stefan Stalmann from Autonomous Research.

[Stefan-Michael Stalmann, analyst]

Good afternoon, gentlemen. Thank you very much for hosting the presentation. I would like to start with a couple of questions on the topic du jour. So in particular, the tariff issue and maybe the dollar exchange rate, you have about CHF 6 billion of SME exposure. And I guess I mean the tariff trouble basically started in April. So you have probably done some preliminary screening and your comments kind of hinted at that identifying the counterparties that may be affected. Can you give us a rough sense of how much of this SME portfolio could be in an elevated risk category with respect to these tariff developments? And maybe also with respect to the strengthening of the Swiss franc against the dollar. And related to this, could you maybe remind me how the potential is for you to book precautionary reserves and provisions under Swiss GAAP on performing loans. So similar to the Stage 1 and Stage 2 provisions under IFRS.

And the second question relates to the dollar. Could you maybe give us a rough indication how much of your loans and deposits are actually dollar denominated. That would be great.

[Pascal Kiener, executive]

Okay. Let's start with the first one. Yes, of course, we started a bit earlier. But during this first assessment, we are talking about 10% to 15% tariffs. So basically, this was, I would say, not enough, but it was very low, especially knowing the fact that those companies -- I mean, you see Switzerland for the last 40 years, I've seen the same story. We have high salary cost, high labor costs, and we have a very strong Swiss franc. So the dollar or euro went down year after year compared to the Swiss franc. That means those companies to survive, they had to focus on high-margin products, very niche products, highly technical, highly sophisticated. Otherwise, they could not get the price and survive.

So given 10%, 15% tariff that was in a way no issue. 39% is a bit more. So the story is a bit more complicated. But you see, I cannot give you more than that today because it's so different from companies to companies. Some of them have already decided we stop exporting in the U.S. We will turn over to other markets, okay, fine. Others are trying to find a way to export in a different way. So it's very difficult. It's -- I could even go further saying that for the company themselves, for the corporate, this is not clear exactly what the future will be. So can you imagine for a bank trying to consolidate all those information, it's quite difficult. But I mean it's -- I mean we're not talking big numbers. And I do not expect, especially in H2 for this year to have any relevant impact.

2026, maybe -- but I mean it's almost impossible to answer quantitatively. I would say something wrong. So this is why -- but I'm confident. I don't see any major issue. So maybe we might have more risk cost than usual. That's possible. But it will not affect, let's say, our results in a tremendous way. I don't see that. We have probably more risk every year due to the trade finance business, which is more risky where you have no provision for 5 years. And suddenly you have a case. So this is why it's difficult to assess. But you see, I mean, the corporate book is not that big. It's mostly mortgage. You have also to know that we also have some mortgage with those SMEs, so on their properties, et cetera. So I'm not really worried about that. I don't want to be over optimistic. But for the time being, I cannot see a huge problem or even an average problem for BCV. Let's put it like that.

Now given your second question on provisioning. So what we do, we -- I mean, I give the word to Thomas better than myself. But we cannot say now we expect that we have a problem maybe in 6 months, and we put provision. We do that with the expected loss. I give the word to Thomas.

[Thomas Paulsen, executive]

Yes. Stefan, I mean actually, that works through over the loss class, right, expected loss. And so for the risk-weighted assets, right, which is based on PD and LGDs. So obviously, I mean, if you see that there's more tension on a company, it may triple -- double, single A might become a BBB or BB. This will have an impact on risk-weighted assets. And as a matter of fact, we do provisioning of expected losses in a sense that they really, really noncomprised, they are expected loss of 12 months horizon. Those which are high risk, but not default, they are provisioned on lifetime cycle. And obviously, those which are default are obviously on the fully lifetime expected loss.

So it will walk through on that page, which you actually -- when I look at your comments from this morning, you have been looking at with regards to provisions of compromised and noncompromised loans.

[Pascal Kiener, executive]

And then the question on the dollar. So maybe I don't think this is the Swiss franc, which is strong versus the dollar. This is the dollar, which is weak because if you look at the exchange rate, Swiss franc, euro, it's quite stable. And don't forget that Switzerland, the main partner is not the U.S. it's the Eurozone. So that will be a stabilizing factor. So far, I don't know exactly the number you're looking for by heart. Your question was the exposure in dollar, is it correct?

[Stefan-Michael Stalmann, analyst]

Yes. That's a rough sense of how many of your loans and deposits are dollars, maybe more to get a sense of the translation effect.

[Pascal Kiener, executive]

Deposit is very low and loan, this is mostly trade finance. Yes. I mean you can -- I mean look but not all trade finance is in dollar.

[Thomas Paulsen, executive]

When it's dollar, it's trade finance.

[Pascal Kiener, executive]

Exactly. So we don't have any credit for -- I mean, we don't have any loans in the corporate business outside Switzerland, nothing, 0.

[Stefan-Michael Stalmann, analyst]

Excellent, okay.

[Pascal Kiener, executive]

Only trade finance which is, as you know, which is a kind of fast move -- fast-moving business, so you can, I mean, stop very quickly. And those are transactions. So here, I don't expect any -- except a kind of a slowdown of the international trade due to those tariffs, that's clear. But otherwise, I don't expect any, let's say, problem in our trade finance business in terms of cost of risk due to the tariffs.

[Thomas Paulsen, executive]

Stefan, I would like to take the opportunity that with regard to your comments of this morning, right, I know you are very good reader of our Basel III report. But I think there's one code, which is the increase in compromised loans or private banking, you missed one number. So if you look at the Table 8, right, in the Basel III report, it's less than you indicated in your comments. Just look carefully at the Table 8 of 2024 and 2025.

I don't want to take more time of other people. If you have more questions, you just call correctly, okay?

And then Gary, he gives me a hint. I mean, with regard to your idea that do we kind of forfeit lump sum provisioning. I mean, also in this context, just remember, we don't play with banking, real banking risk reserves, right? We always show our real result as it comes out and we apply systematic expected losses just explained before.

[Operator]

[Operator Instructions] The next question come from Ausano Cajrati from ZKB.

[Ausano Cajrati Crivelli Mesmer Nobili, analyst]

So I have one question regarding the competition among banks. What's -- how do you perceive the competition in 2025? And how do you anticipate the development of the margins for loans? And what are your expectations going forward for the net interest margin?

[Pascal Kiener, executive]

Okay. I mean, competition, you see it's quite different from business to business. Let's take retail and mortgage, which is probably your question. I mean competition is tough, but this is not new. So I mean there is 1 player less. So it means, in a way, the competition is reduced. But on the other hand, you have all those online platforms, you have other nonbanks provider like insurance. So in mortgage business, the competition will continue to be tough, but not tougher as yesterday or 2 years ago. I mean this is tough competition, this is a commodity.

Then if you take commercial loans, that's another story because here, clearly for those SME or small firms, I mean, they don't have a you choice. Either you go to UBS, you go to the local Cantonale Bank, ZKB, Vanguard, Geneva or [ Vaud ] or maybe to Raiffeisen for maybe smaller companies. And that's it. So this is not easy. So here, the competition, I would say, will be reduced. And on the -- also, you see the mortgage market is quite transparent. The prices are quite transparent. If you look at the SME business, I mean, the risk assessment is different from one provider to another one and the prices are not transparent at all.

Now if we go further, if we talk about wealth management, here, competition is quite tough. Credit Suisse has a good as a good position and UBS is trying to defend this position. But again, there is one player less. So that's quite a statement. And if you take, for example, the asset management, so the pension fund business, you see here, we have an opportunity to increase our market share. It takes time because those pension funds, they need time to decide, which is normal. But if you look at the structure, I mean, of almost all pension funds, they had an asset manager being Swisscanto or ZKB, being UBS, Credit Suisse, maybe Pictet, BCV depending on the counter. I mean the share of wallet to UBS, Credit Suisse will be reduced. I'm convinced about that. So that means the other player will be able to take over that share, being Swisscanto, being Pictet or Lombard Odier or BCV especially in Canton of Vaud.

So you see, I'm not sure we can say that the competition is tougher than before. I think we have to differentiate between segments. And that's the point of competition. Interest margin, you see -- I mean, what's going to play a role is not really the competition. It is basically the level of interest rates. I mean 0 is not very good for banks, as you know. And now how long that situation will last? Maybe interest will go negative. We don't know and look at the numbers during the negative rate period some years ago, and you will see -- so there will be continued pressure on the interest margin. I'm convinced about that.

We can compensate part of that with volume increase, but just part of that. So you can assume that the net income, basically will be less interest will go down corrected by the volume, but the volume will not compensate the effect of interest rates. So probably, going forward, exactly the same mechanics, same dynamic as we saw some years ago, net rate -- net interest revenue will go down. But on the other hand, the commission business should go up. So the total of that is difficult to assess right now.

[Operator]

We have no further no further questions from the phone. Back over to you for the written questions.

[Pascal Kiener, executive]

Yes. We have a question from the webcast. It's coming from Mr. Greschner from finance of Derschutze. So the first question is, although the operating expenses remained stable, the cost-income ratio increased to 55.6%. Could you explain why?

The second question is that we saw in the first half of the year, a smaller growth of 2% in mortgage loans is that due to restrictive credit lending? Or is it due to a stronger market position of UBS in the market -- in the mortgage loans.

And the third question is how far an evolution of the imputed rental value would affect this year.

Okay. Let's start with the first question. I think the revenue went down. I mean, this is a basic calculation. So I assume the numbers are correct. So the revenue went down.

[Thomas Paulsen, executive]

I think Revenue stable.

[Pascal Kiener, executive]

No, they went down CHF 3 million or CHF 2 million slightly. Thomas, the question...

[Thomas Paulsen, executive]

I mean I just look to number, but I mean, top line is stable and there is a slight increase in total operating costs.

[Pascal Kiener, executive]

From a slight decrease in revenues.

[Thomas Paulsen, executive]

A slight decrease in revenues, yes.

[Pascal Kiener, executive]

So that explains Okay. Now second question. I don't know the strategy of UBS, but last year, UBS basically decrease or was less aggressive in the mortgage business. I'm not saying they are aggressive today, but they had a strategy of -- because they had some -- not liquidity problems. They had to reverse to give back some money to the SNB. So basically, I can say that. Basically, I would say UBS was very cautious in terms of taking new exposure, not from a risk point of view, but from a funding point of view. So that's the first point.

Second point, we had a very, let's say, very good growth last year in the different business, especially in the real estate fund business. And due to, let's say, the financing situation for banks in Switzerland, which were quite difficult -- which was difficult last year. It's going much better this year. We decided to be very cautious also from a funding point of view this year. So that explains the difference between the 2%. And I think last year, it was probably 4%, okay? Now 2%, which would be a 4% on an annual basis. And if you look at the retail business, we are rather at 3% is a very good growth, and I'm not strategically targeting more than 4% every year.

Now the question to the market position. So I don't think they have a stronger market position. I think they have decided maybe not to continue to be very cautious from a funding point of view. I think they have secured their funding. They have finished their paying back UBS. I don't know all the details, but this is what I can imagine. And they are back to the market, which is good.

And now the next question, of course, it will have an effect, but we cannot disclose any number. And it will take time because people will not do that overnight. Now it depends what's going to happen. We don't know. I think this is a very, let's say, open question in Switzerland, whether it's a yes or no, I don't know. But of course, if it happens, then people or some will pay back the their loans. This is clear. Now you see, if you look at the last 20 years, all new loans mortgages were issued at 80% value. So I don't think that all those people that got a mortgage in the last 10 years, they have the money to pay back so easily. So I don't -- I'm not worried about that. It will have a small impact. It will have a small impact, just to be clear, very marginal over time.

[Operator]

Gentlemen, we have a follow-up question from Mr. Stalmann from Autonomous Research.

[Stefan-Michael Stalmann, analyst]

I thought I'd take the opportunity if we stay at some time. But I wanted to follow up on your comment on the net interest margin where you expect maybe a bit more pressure. Your major competitor, UBS is actually providing a sensitivity that says if rates go down another 100 basis points, so into negative territory, net interest income in their business would actually rise and quite substantially. And as a result of basically floored loan rates, if I understand this well. Do you see something similar happening in your business? Or is that a very peculiar situation at UBS?

[Thomas Paulsen, executive]

No, we agree. We agree. We have the same appreciation. I don't know the magnitude, but in relative terms. For us, the line on the 0 line is the worst case scenario. Given, I mean, the monetary policy of SNB with regard to this has 2 components, right? One is the negative interest rates. The second is using these exemption levels, right? And basically, when you get into negative rates, you basically get subsidized with regard you have with SNB. And there's that element, which then actually is revenue generating.

[Stefan-Michael Stalmann, analyst]

So if that flooring of loans also helps you, is it still reasonable to expect that the net interest margin contracts? Is that taking that into account?

[Thomas Paulsen, executive]

Well, even the flooring of loans.

[Stefan-Michael Stalmann, analyst]

If I understand it correctly, UBS thing is that rates going negative will benefit the net interest income is because the loan rates -- the reference rate and the loan documents are floored at 0, so they cannot drop below 0. So the...

[Thomas Paulsen, executive]

That's an additional component. Yes, you can add to my argument, which I just gave you, there's additional effect. As a matter of fact, analytically speaking, from a pure market perspective, mortgage rates would have -- in particular the short mortgages would have a substantial higher marginal commercial margin.

[Stefan-Michael Stalmann, analyst]

And yes, the overall net interest margin could still go down?

[Thomas Paulsen, executive]

The overall -- let me confused. I put one more time systematically. I just put it systematically, right? If -- coming from 0, the short-term interest rates, in particular, up to 1 to 2 years, go into negative grounds, right? You have 2 interesting elements, right? First of all, put it that way, mortgage rates from 0 to 2 years would almost not change. That's how Swiss banks behaved in the past, and we think that will go on, which analytically speaking, means a significant higher margin commercial margin.

Secondly, we will make money as what we call arbitrage or being filling up the exception level, putting billions as the SNB at 0 and taking that money in being paid for taking it in.

[Pascal Kiener, executive]

See, I mean to answer also, I mean, 0 is the worst case for us, okay, for Swiss banks in this, not only for BCV is the worst case. Now for the next 6 months, probably that's going to remain at 0. And they were just introduced at the end of June, so you don't see the full impact during the first half. So from that point of view, probably there will be pressure on net interest income in the coming months. Now going negative, I think we share the appreciation of UBS, Thomas explained. Now the exact order of magnitude, I don't know, but I would prefer a negative interest rate for us than 0, 0 is the worst case scenario. So depending on the situation, how long will the SNB remain at this level? I don't know. If you look at the floor, et cetera, probably in September, they will remain that. But in December, depending on the economy, they might go 25 basis points down. We don't know. But I mean, let's assume the 0 will stay for a couple of months. Then for us, it's not very good. That's the message.

[Stefan-Michael Stalmann, analyst]

Yes. Okay. That makes sense. I understand that. And maybe a last one, if I may, and that's on net commission income, where most of your net commission income is coming from securities and investment transactions. And one of the metrics that I look at over time is how the income from securities and investment transactions relates to AUM. And that number, that margin has been coming down for a long time. But over the last 2 years, it has gone actually up. And I'm wondering if that is just a random combination of inputs or whether you have actually changed anything in the way that you run your business? Is there a different business mix on the AUM side? Is there a different pricing? Is there different client behavior that makes the margins go up.

[Thomas Paulsen, executive]

I think you are a very careful reader. And we actually realigned somehow the setup of the investment funds for our clients, we simplified them, which means that we balanced part of funds and existing funds. So there has been a peak in transaction volumes, and I think that's what you found.

[Pascal Kiener, executive]

If you look also, I mean, we have a new head of Private Banking. He joined BCV, I think, 2 years ago and he was coming from Credit Suisse. And he had some ideas to, let's say, to change the way we were doing things, and this is a positive impact.

[Stefan-Michael Stalmann, analyst]

I see. As long as you don't sell any particularly FX deposits, I'm very happy about that.

[Thomas Paulsen, executive]

We don't do product pushing.

[Pascal Kiener, executive]

We don't do that. We don't do that. We have really an open architecture and probably we are one of the most open architecture bank in Switzerland. So -- we don't do those kind of things, no, don't worry.

[Operator]

Gentlemen, so far, there are no further questions from the phone back over to you for any closing remarks.

[Pascal Kiener, executive]

Okay. Thank you to all for attending this conference. Thank you very much, and see you probably in February 2026. Bye-bye. Have a nice day.

[Operator]

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.