Annual Review

Conclusion of the 2021 to 2025 strategy period

With its ‘LUKB25’ strategy, LUKB set itself ambitious targets for the years 2021 to 2025 – with a clear focus on sustainable growth, high levels of efficiency, customer proximity and a robust risk position. At the end of 2025, it can be observed that the strategy has been implemented very successfully. The Bank is financially strong, organisationally well positioned and has a clear strategic focus for the next development phase.

Profitability and growth

LUKB recorded high and stable profitability over the entire strategy period. At the end of 2025, cumulative net profit of 1,371 million Swiss francs was well above the target range of 1,260 to 1,330 million Swiss francs, which had been increased twice during the strategy period. Growth was of a high quality and did not expand the risk profile.

During the strategy period from 2021 to 2025, the target range for net profit after taxes was increased from between 1,025 and 1,100 million Swiss francs in May 2023 to between 1,075 and 1,200 million Swiss francs and in February 2025 to between 1,260 and 1,330 million Swiss francs.

Income diversification

The earnings base was broadened as targeted. Non-interest income increased to 233 million Swiss francs in the 2025 financial year and continued to gain in importance structurally. The Bank also tapped into new sources of income by launching offers in the area of digital assets.

Operational efficiency

Efficient operation is an important prerequisite for a sustainable range of services to the benefit of our clients. With a cost-income-ratio of 46.1 % (at the end of 2025), it was well below the strategic ceiling of 50 %. This was made possible by regularly simplifying processes, the increased use of digital working and advisory tools, and a strong degree of cost awareness at all levels.

Capitalisation and stability

The Bank remained very solid financially throughout the entire strategy period. The total capital ratio of 20.6 % is in the upper range of the strategic target range, while the CET1 ratio of 14.7 % comfortably meets the increased requirements. The strong capital base – also thanks to the successful capital increase in 2023 – ensures resilience, profitable growth and stakeholder trust in the bank.

During the strategy period from 2021 to 2025, the total capital ratio target was increased from between 14 % and 18 % to between 16 % and 20 % as of January 2023 and to between 19 % and 21 % as of July 2025.

Increase in earnings per share

LUKB increased consolidated profit to 295.5 million Swiss francs in 2025, which corresponds to a return on equity of 7.26 %. Due to the increase in consolidated profit, earnings per share rose to 5.97 Swiss francs, a new record high.

Strategic development

In addition to the quantitative targets, LUKB made targeted investments in its future viability. The expansion of investment mandates and the speciality business with national reach, the modernisation of the advisory process as well as selected innovation initiatives strengthened its competitive position, the added value for clients and organisational performance.

Notes for the 2025 financial year

Growth targets for 2025 exceeded

LUKB set itself ambitious growth targets for the closing year of the ‘LUKB25’ strategy period and exceeded all of them.

• New money in advisory or asset management mandates for the 2025 financial year amounted to 1.093 billion Swiss francs (target: at least 1 billion Swiss francs).
• Non-interest income amounted to 232.9 million Swiss francs in the 2025 financial year (target: at least 215 million Swiss francs).
• The lending business grew by 6.9 % in the 2025 financial year (target: 2.00 % to 3.75 %).

Notes to the income statement

Increase in earnings in all three pillars of operating income

The interest business – the main pillar of income – contributed 458.1 million Swiss francs to the operating result, which corresponds to an increase of 14.1 million Swiss francs or 3.2 % on the previous year. This growth is above expectations due to successful tactical interest rate management, which dampened the impact of the zero-interest-rate environment. Nevertheless, interest income declined by 5.4 million Swiss francs in the second half of 2025 compared with the first half of the year. Growth in the interest business was also driven by the 6.9 % increase in loans to clients.

In the 2025 financial year, LUKB increased its commission and service income by 10.1 % to 143.2 million Swiss francs (2024: 130.1 million Swiss francs). The largest contribution was provided by commissions from the securities trading and investment business, which benefited from attractive investment markets, sustained demand for asset management and advisory mandates, and overall positive growth on the investment markets.

Net trading income amounted to 76.0 million Swiss francs, which is 19.5 million Swiss francs or 34.5 % more than in 2024. This marked increase is due to higher client demand across all trading segments. In addition, issuing activities in the securities business as well as activities in the primary and secondary markets for structured products were expanded as planned, further supporting growth.

At 13.7 million Swiss francs, other ordinary income was well below the previous year’s figure of 19.9 million Swiss francs. This decline of 31.4 % is attributable to the conscious decision not to sell financial assets. Conversely, compulsory reserves increased by a further 16 million Swiss francs due to the performance of the equity securities held by LUKB.

Operating income of 691 million Swiss francs

In total, non-interest income for the 2025 financial year amounted to 232.9 million Swiss francs compared to 206.5 million Swiss francs in the previous year. The growth target in the non-lending and non-deposit business was therefore significantly exceeded as a result of this increase. Including interest income, operating income amounted to 691.0 million Swiss francs, up 6.2 % on the previous year (2024: 650.5 million Swiss francs).

Balanced contributions from all segments

Segment reporting for 2025 shows that LUKB's earnings base remains broad-based. All sales segments made a significant contribution to the net profit after taxes of 295.5 million Swiss francs (figures rounded):

• Private & Commercial Clients: 95.1 million Swiss francs (2024: 99.2 million Swiss francs)
• Corporate Clients: 102.8 million Swiss francs (2024: 93.4 million Swiss francs)
• Private Banking: 65.9 million Swiss francs (2024: 63.3 million Swiss francs)
• The corporate centre comprises all other costs and income (including trading) and closes the financial year with a contribution margin of 31.6 million Swiss francs (2024: 55.7 million Swiss francs).

2 % higher headcount

Headcount rose from 1,181.0 to 1,206.2 full-time equivalents in the 2025 financial year. Consequently, personnel expenses increased by 4.5 % to 218.4 million Swiss francs.

On average, the headcount (including apprentices recognised at 50 %) for 2025 was 1,191.7 full-time equivalents (previous year: 1,160.0 full-time equivalents) and is comprised as follows:

• Luzerner Kantonalbank AG (parent company): 1,181.9 full-time equivalents (previous year: 1,147.9)
• LUKB Expert Fondsleitung AG: 9.8 full-time equivalents (previous year: 10.0)
• Refinum AG: 0.0 full-time equivalents (previous year: 2.1)

Refinum AG was integrated into the parent company on 31 January 2025.

Additional expenses in the closing strategy year

Expenditure on information and communication technology (ICT), marketing, anniversary events and strategy development raised general and administrative expenses by 11.5 % year on year to 96.8 million Swiss francs (2024: 86.8 million Swiss francs).

Standing at 326.4 million Swiss francs for the 2025 financial year (2024: 306.5 million Swiss francs), this resulted in operating expenses that were 6.5 % higher.

The balanced development of income and expenses resulted in a cost-income-ratio that was stable as at the end of 2025 compared to the end of 2024, making LUKB one of the most efficient full-service banks in Switzerland.

Consolidated profit excluding extraordinary effects

At the level of operating profit, the result for 2025 is 5.0 % higher than in the previous year. At 295.5 million Swiss francs, consolidated profit was 3.1 % up on the previous year. A net result of 6.6 million Swiss francs from the sale of the real estate component of Fundamenta Group Holding AG (31.6 million Swiss francs of extraordinary income less the 25.0 million Swiss francs allocation to reserves for general banking risks) was included in the previous year’s result. Excluding this one-off effect compared with the previous year, consolidated profit increased by 15.4 million Swiss francs or 5.5 % in 2025.

Distribution of 2.70 Swiss francs proposed

The Board of Directors of LUKB will propose an increase in the distribution from the previous figure of 2.60 Swiss francs to 2.70 Swiss francs per share to the Annual General Meeting on 13 April 2026 – one half in the form of a dividend and one half in the form of a distribution from statutory capital reserves exempt from Swiss withholding tax. The payout ratio is therefore 45.2 % (2024: 41.3 %). The distribution will be credited to the shareholders following approval of the proposal on 20 April 2026.

100.8 million Swiss francs for the Canton of Lucerne

Based on the proposal for the appropriation of profit, the Canton of Lucerne will receive a profit distribution of 82.3 million Swiss francs (2024: 79.3 million Swiss francs), cantonal taxes amounting to 7.3 million Swiss francs (2024: 8.0 million Swiss francs) and compensation for the state guarantee, which is calculated according to a formula prescribed by law, of 11.2 million Swiss francs (2024: 10.8 million Swiss francs).

The Canton of Lucerne will receive total benefits of 100.8 million Swiss francs from its investment in LUKB (2024: 98.0 million Swiss francs).

Notes to the balance sheet

Loans to clients

As at the end of 2025, LUKB’s total volume of loans to clients amounted to 46.353 billion Swiss francs (2024: 43.374 billion Swiss francs), which corresponds to an increase of 6.9 %. Of this portfolio, 40.918 billion Swiss francs is attributable to mortgage loans (2024: 38.235 billion Swiss francs), which in turn recorded growth of 7.0 %.

The share of mortgages for owner-occupied properties is around 30 %.  The average loan-to-value ratio of residential loans at LUKB decreased further in the 2025 financial year and amounted to 52.9 % as at 31 December 2025 (31 December 2024: 54.1 %).

Equity

LUKB’s equity consists of the share capital, various reserves and consolidated profit, rising to 4.225 billion Swiss francs by the end of 2025 (end of 2024: 4.045 billion Swiss francs). The increase is primarily attributable to consolidated profit as well as the reduction in the LUKB treasury shares held by the bank. Of this amount, 133.9 million Swiss francs will be paid out to shareholders in accordance with the proposal for the appropriation of profit in April 2026.

Taking this proposal into account, LUKB increased the CET1 ratio from 13.9 % to 14.7 % in 2025. The total capital ratio rose from 18.5 % to 20.6 %.

Further information can be found in the Section ‘Composition of capital and TLAC’ in the 2025 Disclosure Report.

Risk-weighted assets (RWA)

Information on this can be found in the section ‘Overview of risk management, key figures and risk-weighted assets (RWA)’ in the 2025 Disclosure Report.

Client assets under management

LUKB and its clients were able to make good use of the opportunities presented by the volatile market environment. During the 2025 financial year, for example, LUKB recorded an increase in assets under management from 3,118 billion Swiss francs (including net new money of 1,285 billion Swiss francs) to 42,607 billion Swiss francs.