Swiss and Liechtenstein private banks delivered another year of asset growth in 2025, but PwC’s new market update points to a less comfortable truth for the industry: the post-rate-hike profit cushion has faded, costs remain stubborn, and scale is becoming the clearest dividing line between winners and laggards.
Swiss private banking will reward institutions that can convert inflows into fee-based growth (Image: Px Here)
The sector continued to benefit from Switzerland’s enduring «trust dividend» as geopolitical tensions, fragmented politics, and market volatility reinforced the country’s appeal as a jurisdiction for wealth preservation, according to PwC’s latest «Private Banking Market Update 2026».
Across the 70 private banks analysed by PwC, assets under management rose in every size category, with small banks up 8.0 percent, medium-sized banks up 5.5 percent, and large banks up 6.3 percent.
New Money Confirms Client Confidence
Net new money remained positive across the market, showing that clients are still allocating fresh capital to Swiss and Liechtenstein private banks despite tougher conditions. Small banks posted the strongest inflow rate at 5.2 percent, followed by medium-sized banks at 4.3 percent and large banks at 2.8 percent – evidence that boutique positioning and targeted client strategies can still compete with institutional scale.
Asset growth was solid but notably cooler than in 2024, when market performance delivered double–digit gains across the sector. In 2025, a stronger franc – particularly against the dollar – diluted the value of foreign-currency assets, while volatility and geopolitical risk made the operating backdrop more uneven.
Fees Must Do More Heavy Lifting
The sharpest strategic message from the study is that private banks can no longer rely on interest income to lift returns, PwC’s managing director Martin Schilling notes. With Swiss National Bank rates back at zero, operating income margins fell across all bank clusters, even as absolute operating income rose by 3.0 percent overall. Medium-sized banks were hit hardest, with operating income margins dropping from 83 basis points to 75 basis points.
Net fee and commission income remained comparatively stable, but not strong enough to offset the decline in interest–related earnings. This leaves private banks facing a familiar but urgent question: can they persuade increasingly fee–sensitive clients to pay for advice, access, and execution in a market where competition is intensifying?
Costs Improved, But Not Enough
Expense discipline returned in 2025, helped by slower hiring and asset growth that improved operating leverage. Expense margins fell across all bank sizes, while total operating costs rose by 3.5 percent and full–time employee numbers increased by around 2.0 percent. Large banks retained the clearest structural advantage, with average yearly expenses per employee rising to 272,000 francs, reflecting the premium paid for top talent.
The cost-income ratio tells the clearest story of divergence. Small private banks saw their ratio rise to 77.1 percent, while medium-sized banks climbed to 78.7 percent. Large banks held steady at 70.2 percent, underlining the benefit of diversified revenue streams, lower reliance on interest income, and scale-driven efficiency.
Returns favour the largest players
The profitability divide was equally stark. Large private banks generated a return on equity of 10.2 percent in 2025, only slightly below the prior year and still firmly in double-digit territory. Small banks slipped to 5.7 percent, while medium-sized banks fell to 5.2 percent levels that may test shareholder patience, particularly where excess capital depresses returns.
Despite margin pressure, the study does not point to an imminent wave of mergers. Deals remained targeted rather than broad–based, with EFG International’s acquisition of Cité Gestion, adding 7.5 billion francs in assets under management, standing out as the largest transaction by AuM. PwC expects gradual reshaping rather than a sudden consolidation surge.
Outlook – Trust Is An Advantage, Not a Strategy
For financially savvy observers, the key takeaway is not that Swiss private banking is weakening. It is that the industry is entering a more demanding phase in which asset growth alone will not protect profitability. Banks will need sharper client segmentation, stronger advisory propositions, disciplined cost management, and scalable technology platforms to defend margins.
Switzerland’s reputation as a safe haven remains a powerful asset, but PwC’s study makes clear that trust alone will not be enough. The next phase of private banking will reward institutions that can convert inflows into fee-based growth, use technology without bloating costs, and build advisory models that serve increasingly global, mobile, and intergenerational wealth. In this new cycle, size matters – but strategic clarity may matter even more.
