Luzerner Kantonalbank AG

Latest Results (26.11.2025):

Luzerner Kantonalbank AG — Q4 2024 (full‑year 2024) summary: The bank reported a solid full‑year 2024 performance (data in the S&P report) with CHF59.5bn adjusted assets, CHF43.4bn gross customer loans and operating revenues of CHF659m. Return on equity was 7.3% for 2024, cost‑to‑income about 52% (S&P calculation; the bank reports 46%), and S&P highlights very strong capitalisation (S&P RAC ~18–19% guidance and CET1 13.9% at year‑end 2024). Asset quality remained strong (NPLs ~0.1%), while funding shows a stable retail deposit base but a higher share of wholesale and hybrid funding than many peers. S&P affirms an issuer rating of AA+/Stable/A‑1+ for LUKB, reflecting a four‑notch uplift from canton support.

Rating and Outlook

S&P: Issuer credit rating AA+/Stable/A‑1+ (as of Mar 27, 2025). The rating includes a four‑notch uplift reflecting an extremely high likelihood of timely and sufficient extraordinary support from the Canton of Lucerne. Outlook: Stable — main sensitivities are the strength of cantonal support, materially weaker RAC (<15%), or materially more aggressive lending growth weakening the SACP.

Capital & Earnings

Very strong capitalisation: S&P reports a risk‑adjusted capital (RAC) ratio around 18–19% forecasted for the next two years and a regulatory CET1 of 13.9% at year‑end 2024. Full‑year 2024 ROE 7.3%; S&P forecasts ROE of ~6–7% to 2027. The bank uses hybrid/AT1 instruments (CHF810m, ~17% of total adjusted capital), which S&P treats as lower‑quality capital.

Business Position & Growth

Luzerner Kantonalbank AG is the market leader in the Canton of Lucerne (~30% retail/corporate market share) with a loan book concentrated in residential real estate (~75% of loans). The bank is pursuing measured expansion outside the canton and increasing structured‑products business to diversify revenues.

Asset Quality & Risk Profile

Sound asset quality supported by a robust Swiss economy and well‑collateralised lending (avg LTV ~55% on mortgages). Gross NPLs remained very low (~0.1%). S&P flags somewhat higher appetite for commercial real‑estate and limited participation in syndicated corporate loans (<5% of loans) as incremental risk.

Funding & Liquidity

Stable funding with a strong retail deposit franchise but a lower deposit share (core deposits ~54% of funding base at end‑2024) and greater reliance on wholesale and hybrid instruments than many peers. Short‑term wholesale funding ~19.6% of the funding base; broad liquid assets ~19% of total assets. S&P judges liquidity adequate and able to withstand >12 months without market access under current profiles.

Key Risks & Other Notes

Main risks: accumulation of risk if lending growth becomes too aggressive (S&P watches growth and RAC), higher dependence on hybrid capital and wholesale funding, and concentration in central Switzerland/real estate markets. 2024 owner payments: CHF98m paid to the canton (includes guarantee fees and taxes); S&P expects similar payouts in the near term.