Banque Cantonale Vaudoise : Interim Report - Consolidated financial statements at 30 June 2023

Interim Report

Consolidated financial statements at 30 June 2023

2

Letter from the Chair and the CEO

Macro-economic and geopolitical uncertainty remained high during the first half of the year, while central banks continued to tighten their monetary policies to bring down inflation. That included a string of policy rate hikes in a relatively short time span. In the US, the sharp rise in rates created problems for a number of regional banks and stoked fears about the global financial system. Here in Switzerland, Credit Suisse experienced massive customer withdrawals and was ultimately taken over by UBS.

BCV was not impacted by this turmoil - another example of our long-recognized stability. The rate hikes, after an extended period of negative interest rates, underpinned our record half-year results. Mortgage lending expanded by 2% to CHF 31.2bn despite the softening real-estate market. Other loans declined 2% to CHF 6.1bn, reflecting Covid-19 loan reimbursements and lower Trade Finance activity. Customer deposits were down 2% overall from end-2022 to CHF 37.5bn, with deposits from individuals and SMEs expanding by 1% and deposits from large corporates and institutionals down 5%. With interest rates now positive, customer assets on our balance sheet are once again adding to the Bank's top line. Total revenues came in at CHF 582m, up 11% year on year. Operating profit rose 22% to CHF 276m, with expenses well under control despite inflation. Net profit climbed 22% to CHF 240m - the best half-year earnings in BCV's history, excluding one-off items.

These solid numbers show once again that our strategy is sound. We take a long-term strategic approach, in line with the principles of economic sustainability. Of course, the issue of sustainability also extends to the environment, and BCV has a long track record in that area as well: we've been calculating our carbon footprint since 2012 and have set a target to reduce our CO2 emissions by 35% from 2019 levels by 2030. We'll continue to actively develop our climate strategy, most notably to remain in step with the targets set by the Swiss federal government and the Canton of Vaud. More information on these commitments and many others can be found in the 2022 Sustainability Report, which was prepared in accordance with the 2021 Global Reporting Initiative (GRI) norms and published in the spring. We will keep evolving this report in order to comply with the new non- financial reporting obligations under Swiss law. As part of this process, we will submit our 2023 Sustainability Report for approval by our shareholders at the next Annual Shareholders' Meeting on 25 April 2024, along with our annual report and financial statements.

Eftychia Fischer	Pascal Kiener
Chair of the Board of Directors	CEO

At this year's Annual Shareholders' Meeting, 593 shareholders representing 82% of our voting capital met at the Palais de Beaulieu in Lausanne. Every item on the agenda was approved by more than 95% of votes cast. That included a dividend payout of CHF 3.80 per share on 10 May, which returned a total of CHF 327m to shareholders.

We remain confident in our business model as a universal bank with strong local roots. We target sustainable growth that focuses on our Canton, a low risk profile that aligns with our role as a cantonal bank, and the financial solidity that enables us to pursue a generous distribution policy. We also recognize that all our stakeholders play a part in BCV's continued success, and on behalf of the Board of Directors and the Executive Board, we would like to thank our customers for their trust, our shareholders for their steadfast support, and BCV Group employees for their dedication and loyalty.

Eftychia Fischer

Pascal Kiener

3

Business sector review

Retail Banking

Slowing real-estate market

The housing market softened in the first half as interest rates headed upwards. Transaction volumes dropped by about 20%, and prices are beginning to level off or slightly decline in some regions. The Retail Banking mortgage book nevertheless expanded 1% to CHF 9.7bn. Customer savings and sight deposits also rose further, reaching CHF 12.0bn.

The Sector's revenues increased 17% to CHF 111.0m and operating profit climbed 53% to CHF 35.9m on interest rate rises.

Corporate Banking

Swiss firms resilient

Given The Corporate Banking Sector experienced mixed trends in the first half. Vaud SMEs have continued to hold up well overall; according to the latest figures from Commission Conjoncture Vaudoise, the job market remains firm and business sentiment is generally strong. Swiss large corporates have also fared well, with Switzerland's ongoing economic expansion overshadowing weak growth among Switzerland's main trading partners. The Real-Estate Clients segment had strong traction in H1, thanks mainly to institutionals. Trade Finance volumes were sharply reduced compared to recent years in light of the geopolitical situation.

Total lending and off-balance-sheet commitments rose 2% to CHF 19.0bn despite ongoing Covid-19 loan reimbursements. Customer deposits declined 3% to CHF 12.1bn, reflecting the usual volatility in cash and cash equivalents held by large corporates and institutional clients.

The loan book remained healthy, as shown by the Sector's low provisioning needs. Corporate Banking revenues contracted 2% to CHF 136.4m, and operating profit was down 3% to CHF 81.1m.

Mortgage loans in CHF billions

9.6	9.7
31/12/22	30/6/23

Customer deposits in CHF billions

11.7	12.0
31/12/22	30/6/23

Lending and off-balance-sheet commitments

in CHF billions

18.6	19.0
31/12/22	30/6/23

Customer deposits in CHF billions

12.4	12.1
31/12/22	30/6/23

	H1 2022	H1 2023
Total revenues (CHF millions)	94.5	111.0
Operating profit
(CHF millions)	23.5	35.9
Cost/income ratio (excluding
goodwill amortization and
write-downs)	73%	66%
ROE	14.6%	23.3%
Headcount	354	363

2022 figures were adjusted to facilitate like-for-like comparison

		H1 2022	H1 2023
	Total revenues (CHF millions)	138.6	136.4
Operating profit
(CHF millions)	83.5	81.1
Cost/income ratio (excluding
goodwill amortization and
write-downs)	35%	37%
ROE	10.6%	10.4%
Headcount	189	188

2022 figures were adjusted to facilitate like-for-like comparison

4

Wealth Management

Markets perform well despite banking sector turbulence

Assets under management rose 5% to CHF 81.4bn thanks to significant inflows from individual and institutional clients as well as to strong financial-market performance over the period despite the banking-sector turbulence in March.

Private-banking mortgage loans were up 1% to CHF 8.6bn in a softening real-estate market.

Wealth Management revenues increased 10% to CHF 219.1m, and operating profit rose 20% to CHF 104.4m.

Assets under management	Mortgage loans
in CHF billions	in CHF billions

Trading

Drop in forex volatility

Forex volatility eased after the market turmoil caused by the default of several US regional banks.

As a result, forex trading income was down 13% in the first half. Forex accounted for around 60% of overall Trading revenues. Structured product issuance increased year on year.

Trading revenues were stable at CHF 30.6m and operating profit held steady at CHF 16.1m.

Breakdown of trading income by market segment

77.6	81.4
31/12/22	30/6/23

8.68.6

31/12/22 30/6/23

Other 5%

Stocks, bonds and interest-rate products 4%

Structured products 33%

Forex 58%

	H1 2022	H1 2023
Total revenues (CHF millions)	198.9	219.1
Operating profit
(CHF millions)	86.9	104.4
Cost/income ratio (excluding
goodwill amortization and
write-downs)	56%	52%
ROE	40.8%	48.5%
Headcount	550	542

2022 figures were adjusted to facilitate like-for-like comparison

		H1 2022	H1 2023
	Total revenues (CHF millions)	30.6	30.6
Operating profit
(CHF millions)	16.6	16.1
Cost/income ratio (excluding
goodwill amortization and
write-downs)	45%	46%
ROE	33.2%	27.8%
Headcount	51	50

2022 figures were adjusted to facilitate like-for-like comparison

5