Rating agencies play a key role in the world of international finance in that they allow banking establishments and finance houses to evaluate the credit quality of debt issuers.
According to FitchRatings and Moody's, two of the major international rating agencies, Pictet's ratings are among the highest in the banking industry today, and stand as follows.
These ratings attest to Pictet's solidity, which among other factors is generated by an equity base significantly larger than that required by Swiss banking regulations, already among the most stringent in the world.
In addition to the Bank's strong capital base, it also benefits from the outstanding quality of its corporate governance, as well as the absence of long-term debt and of commercial banking activities.
FitchRatings - July 2013
For the eighth year running, FitchRatings has confirmed its "stable" outlook for the Bank, and has awarded Pictet an AA- long-term rating (IDR) and an aa- viability rating (VR) for 2013.
Extract from FitchRatings press release, 5 July 2013:
"Pictet's IDRs and VR reflect the bank's diversified and profitable wealth and to a lesser extent asset management franchises, its low risk appetite, strong balance sheet, solid funding and liquidity profile and solid capitalisation.
The ratings also take into account regulatory pressure on the Swiss private banking industry leading to higher operating expenses and limiting business opportunities as well as cyclical earnings pressure on the wealth management industry in general from the low interest rate environment, sluggish market developments and low risk appetite and the elevated Swiss franc. However, due to its size, diversification and low overall risk profile Pictet is in Fitch's view better placed than most peers to face these challenges.
The stable outlook reflects Fitch's expectation that Pictet will continue to generate stable and adequate profitability while avoiding significant operational or reputational losses."
Moody's - July 2013
For the fifth year running, Moody's has awarded Pictet & Cie an Aa3 long-term rating and a B- financial strength rating, thereby confirming its "stable" outlook for the Bank.
Quotes from Moody's Credit Opinion, 31 July 2013:
Well-known global private banking franchise, combined with asset management and asset servicing activities
"Pictet & Cie and the other group companies form one of the largest managers of private and institutional wealth in terms of AUM, second only to groups such as Credit Suisse and UBS and on a par with other large private banks such as HSBC Private Bank or Julius Bär Group."
Change in legal status may herald gradual change in corporate culture
"We highlight that the change in legal status enhances transparency and comparability, i.e. clients and counterparties will benefit from increased transparency as Pictet & Cie will be required to publish financial statements and appoint an independent supervisory board, which was not the case under the current legal structure. The new structure will also facilitate comparability with its peers."
Good and resilient level of risk-weighted profitability
"We believe that during this period, Pictet & Cie fared relatively better than some of its competitors, enabling it to attract net new assets and gain further market shares."
Liability-driven balance sheet with large cash balances
"As a result, we consider the bank's liquidity profile to be relatively robust in the context of the current challenging funding environment for banks."
High quality of capital that well exceeds regulatory requirements
"Both the level and quality of capital are key factors that underpin Pictet & Cie's creditworthiness, strategic flexibility and commercial strength. The bank's robust earnings capacity contributes positively to Pictet & Cie's ability to raise its regulatory capital base in case of need, even after allowing for the distribution of dividends to its partners."
Low risks from lending activities
"Pictet & Cie's asset-quality metrics compare favourably with those for banks globally and are in line with those of its private banking peers. We believe expected and unexpected loss levels are, and should remain, very low. At year-end 2012, the bank reported minimal impaired loans."