SNB FSR: Economic, financial conditions for banking sector has deteriorated markedly

The Swiss National Bank (SNB) released its latest Financial Stability Report (FSR) on Thursday, underscoring concerns about the economic and financial conditions for the banking sector.

Key takeaways

Economic, financial conditions for Swiss banking sector has deteriorated markedly.

Credit quality in Switzerland and abroad is expected to deteriorate.

Worse-than-expected developments would weigh further on banks' profitability.

Solid capital base puts UBS, Credit Suisse in favorable position to face challenges.

But stock market correction has reduced AUM value.

Uncertainty could lower demand for client, capital market transactions.

But impact on UBS, Credit Suisse likely to be limited due to partial economic recovery in 2H 2020 and stabilization in financial markets.