We analyse the impact of interest rates on Swiss banks' profitability. Our assessment is based on annual data on individual bank balance sheets and income statements in a standard panel regression setting for a sample of domestically focused commercial banks. We find that net interest rate margins (NIM) and return on assets (ROA) exhibit different sensitivities to market interest rate levels and highlight the non-linear effect of compressed liability margins on NIM. In addition, we show that initial bank characteristics affect the link between falling interest rates and profitability. However, bank characteristics that amplify/alleviate NIM pressure from falling interest rates differ from those that affect ROA pressure. Furthermore, banks have taken measures to safeguard profitability: (i) with respect to risk-taking, all banks increased their exposure to rising interest rates by increasing their asset durations. Moreover, banks that started with lower mortgage ratios increased these ratios considerably, particularly during the second half of the sample period (2015-2019); and (ii) Some banks actively worked to curb deposit growth when other sources of funding became relatively cheaper. Overall, these adjustments have helped alleviate the downward pressure of falling interest rates on bank profitability.