The loss comes after the bank warned last month of “significantly lower net income” for the first six months from a year ago due to falling interest rates.

“The continued decline in interest rates in Swiss franc caused unrealized losses on interest rate hedges of VP Bank in the amount of SFr8.4 million , which led to the decrease in net profit,” the bank said.

The bank said client assets under management at the end of June were SFr31.4 billion, up 2.7 per cent from the end of December.

VP Bank Group generated net new assets of SFr236 million, compared with a net outflow of client assets of SFr439 million in the first half of 2013.

Assets under custody fell 5 per cent to SFr8.6 billion, down from SFr9 billion at the end of December. Consequently, customer assets including assets under custody amounted to SFr40 billion.

The cost/income ratio was 76.4 per cent at the end of June, compared to 64.4 per cent a year ago, due to lower revenues and costs.

The firm reported a Tier 1 Capital ratio of 20.7 per cent, down from 21.5 per cent a year ago.

“The strong equity position enables VP Bank to invest in growth through targeted acquisitions. We will continue to take advantage of opportunities in the future insofar as they are compatible with VP Bank Group’s strategy and culture,” said chairman Fredy Vogt.

US program

The bank also confirmed that it has pulled out of the US program to settle tax between US and Swiss banks.

The bank said in its half-yearly results that it no longer needed to take part in the program, which it signed up to at the beginning of this year.

“Thorough internal investigations and external expert opinions showed that the conditions for continued participation did not exist. VP Bank therefore withdrew from the US program and the established provisions were reversed as of 30 June 2014,” the bank said.

A number of banks, such as Lombard Odier, Vontobel, Banque Cantonale Vaudoise and St Galler Kantonalbank, have signed up to the US-Swiss pact, framed by the US Department of Justice and signed between Switzerland and the US last year.

There are a number of different categories that firms can state they fall into, depending on whether they think they have violated laws about helping US tax evaders, or not.

VP Bank signed up earlier this year as a Category 2 bank, where there is some risk that US authorities might find examples of tax evasion by American clients.

A category 3 bank, by definition, has not committed any US tax-related offenses and is exempt from having to pay penalties.