State Bank of Glarus Sees Corona Effect
Glarner Kantonalbank is reporting a drop in profit for the first quarter due to the impact of the coronacrisis. It is one of the first Swiss banks to give guidance on its performance during the pandemic. It had to contend with book losses, higher provisions and value adjustments.
The cantonal bank of the government of Glarus (GLKB) had a profit of 5.7 million Swiss francs ($5.88 million) in the first three months of 2020, compared with the 6.9 million it made a year earlier (quarterly statement in German language). The bank had a positive development of its operative business during the period, but the decline of stock markets weighed on the result.
GLKB pursues a long-term strategy with its investments that are worth a total of 274 million francs. The bank adjusted the value of some of its investments to comply with the criteria set for the banking industry, the company reported on Wednesday.
Bonds and Structured Products
The investments most affected are structured products as well as Tier-1-bonds. Both dropped significantly in March and generated a negative valuation adjustment of 3.9 million francs. The drop however was not realized and only a change in the books of the bank, it said.
GLKB increased the level of liquidity it holds to satisfy liquidity demands of its clients during the coronacrisis. It now has 967 million francs, or 14.4 percent of its balance sheet in cash. The balance sheet rose by 335 million francs to 6.74 billion, refinanced through an inflow of savings as well as via the money market.
Uncertain Outlook
GLKB didn’t give an outlook for the remainder of the year due to the uncertainties about the economic developments as a consequence of the pandemic.
GLKB is the state bank of the canton of Glarus, one of Switzerland smallest least densely populated.