Letter on the 2024 financial year

Dear residents of Zurich

In a challenging environment, Zürcher Kantonalbank in 2024 was once again able to generate very pleasing annual results.

The geopolitical situation remains tense, which is why the economic environment remains challenging. Wars are taking place on our doorstep, trouble spots are smouldering, disruptive political conditions are on the rise and we are also facing unresolved challenges in various areas of domestic politics. The order situation at some industrial companies is subdued. A solid foundation looks different.

The Swiss banking centre is facing major changes too. The stricter regulation of all banks following the merger of the two big banks is likely to change the framework conditions for all market participants. We advocate regulation with a sense of proportion that does justice to the competitive and resilient Swiss financial centre while also assuming social and economic responsibility. Our financial centre with its more than 200 banks is diversified, strong and stable. It is an important pillar for our country and our economy. Regulation should therefore be based on simple principles and be proportionate to the complexity, size and risk profile of the various banks.

Strategy for responsible growth to continue unchanged

Zürcher Kantonalbank’s position within the banking centre has also become stronger as a result of recent developments. For many client needs, we are the only Swiss alternative to the big bank. Last year we fulfilled this growing importance and responsibility as a partner with a full range of services for private individuals and companies of all sizes.

Our tried and tested strategy remains unchanged. We aim to expand our leadership position in the Greater Zurich Area, strengthen our national position and utilise international opportunities.

We are traditionally very strong in our core segments for private individuals and SMEs in the Greater Zurich Area and have a market penetration of 50 percent. Our product range is very competitive. With ZKB Banking, we have been offering free everyday banking for everyone for a year now. We also have other extras for people under the age of 30. Our product range is fully comprehensive in line with changing client requirements: on the one hand with the densest network of 51 branches, which we are modernising extensively, and on the other hand through our popular digital channels.

We expanded our specialised segments last year. Private Banking, Asset Management and Corporate Banking are on course for growth because we sharpened our positioning in these areas, launched new products and intensified our sales activities.

The universal bank model continues to prove its worth. In 2024 we generated a consolidated profit before taxes totalling CHF 1.289 billion. The lower net interest income compared to 2023, which we expected, was offset by a strong investment business, with income diversification paying off once again. Taking into account the OECD minimum tax, the canton will receive a dividend of CHF 361 million (2023: CHF 358 million). In addition, there is the compensation for the state guarantee of CHF 31 million (2023: CHF 30 million). The distribution to the municipalities amounts to CHF 170 million (2023: CHF 170 million). Overall, the canton and municipalities will participate in the profit of Zürcher Kantonalbank with CHF 562 million (2023: CHF 558 million) – over the last ten years with over CHF 4 billion. We are also allocating CHF 740 million of our profit to equity, thereby strengthening our stability. With a total loss-absorbing capacity on our risk-based capital ratio of 25.7 percent, we clearly exceed the regulatory requirements. Zürcher Kantonalbank remains excellently capitalised.

The good annual results are based on a high level of client satisfaction. The client satisfaction survey we conducted in the reporting year once again showed that client loyalty and service quality are consistently rated highly in all segments.

We also enhanced our internal operations in the year under review. We have modified our compensation model for all managers and employees and further strengthened our corporate culture through a common understanding of leadership. We sharpened our business model by divesting our subsidiary ZKB Österreich and acquiring Complementa AG. The age-related succession within the Executive Board was continued with the
election of Hjalmar Schröder as Chief Risk Officer to succeed Roger Müller. The Cantonal Parliament elected Dr York-Peter Meyer and Kristine Schulze as successors to Henrich Kisker and Walter Schoch, who resigned.

Public service mandate and financial security guide our actions

We will continue to drive the further development of our bank in the future. Two factors determine the framework for our business activities.

• First, we strive for maximum financial security for our bank. ZKB is rated triple-A by the three leading rating agencies, taking into account the state guarantee, and aa- without the state guarantee, making it one of the safest banks in the world. Our bank is excellently capitalised. Another aspect of the bank’s security is that we grow responsibly – in harmony with the canton and on the basis of our proven risk policy.
• Second, the framework for our actions is provided by the statutory public service mandate, for which we invested CHF 140 million in the reporting year. Our business model is based on this and, with our unique selling point of contributing to solving economic, social and sustainability tasks in the Canton of Zurich, obliges us to be more than just a bank. In order to fulfil our public service mandate, we pursue with our universal banking model a business policy geared towards continuity, stability and diversification. In addition to ZKB Banking and the modernisation of our locations, other aspects of our bank’s activities that show how we are fulfilling our public service mandate include corporate volunteering, the ZKB Philanthropy Foundation, sustainability consulting for SMEs, ZKB environmental leasing and our climate targets. We are proud of this.

We aim to continue to grow responsibly in the future and to diversify our income base in the interests of the security and stability of our bank. This benefits everyone in Zurich. That means providing banking services to the people of Zurich, contributing to solving social problems and allowing the canton and its municipalities to share in our profits. Just like we’ve done for over 155 years!

We thank you for your trust.