LLB Group – Higher Interim Net Profit
OREANDA-NEWS. "In an exceptionally low interest rate situation we increased profit in the first half of 2016 to CHF 43.0 million", said Group CEO Roland Matt. "Thanks to our targeted business model and consistent client focus, we have strengthened our position in the target markets. At the same time, as part of our StepUp2020 strategy we have invested pioneering in innovations."
Successful start to StepUp2020 strategy
In 2016, the LLB Group has made a robust and dynamic start to implementing its StepUp2020 strategy. In a challenging business environment, it is pursuing sustainable, profitable growth. The implementation of the four core elements of growth, profitability, innovation and excellence is progressing as planned.
As the first bank in Liechtensteinand Switzerland, LLB Group has introduced a video identificationsystem when opening an account online and put in place an innovative investment advisory model under the label "LLB Invest" / "Bank Linth Invest". To foster excellence, the LLB Group is also investing extensively in the professional education and knowledge of its employees. In March 2016, a training programme was launched for client advisers in accordance with the standards of the Swiss Association for Quality (SAQ).
Higher Group net profit in challenging environment
The strength of the Swiss Franc, volatile financial markets and increasing regulation continued to challenge the banking industry in the first half of 2016. The United Kingdom’s decision to leave the European Union aggravated the situation. Against this backdrop the LLB Group attained a good business result in the first half year 2016, which at CHF 43.0 million was 5.5 percent higher than in the previous year (first half 2015: CHF 40.8 million).
Operating income rose by 5.6 percent and amounted to CHF 155.1 million (first half 2015: CHF 146.8 million).
Interest income climbed by 5.2 percent to CHF 68.3 million (first half 2015: CHF 64.9 million). Interest earnings from client business increased by 7.7 percent compared with the previous year. Net fee and commission income was down by 5.5 percent to CHF 71.3 million (first half 2015: CHF 75.5 million). Persisting uncertainty on the financial markets led to further client restraint in making stock market transactions.
Net trading income was down by minus CHF 0.8 million (first half 2015: plus CHF 10.9 million). As in the previous year, falling interest rates led to valuation losses from the perspective of the reporting date with interest rate hedging instruments of CHF 18.6 million (first half 2015: CHF 10.8 million). Client trading in foreign exchange, foreign notes and precious metals fell by 18.0 percent to CHF 17.7 million. Following the lifting of support for the Euro minimum exchange rate by the Swiss National Bank (SNB), client foreign exchange trading was exceptionally high in the first half of 2015.
Net income from financial investments stood at CHF 10.0 million (first half 2015: minus CHF 22.1 million).
Strategic personnel expansion increases operating expenses
Operating expenses increased by 7.3 percent compared with the previous year to CHF 108.5 million (first half 2015: CHF 101.1 million). Personnel expenses climbed by CHF 8.9 million to CHF 65.3 million (first half 2015: CHF 56.3 million) as a result of a strategic expansion in human resources to 842 full-time positions (31 December 2015: 816) as well as higher variable salary remuneration. General and administrative expenses remained stable at CHF 30.3 million (first half 2015: CHF 30.5 million).
The Cost-Income-Ratio stood at 69.8 percent (first half 2015: 66.6 %). Adjusted to consider the market effects of interest rate swaps and price gains with financial investments it would have stood at 63.2 percent (first half 2015: 58.2 %).
New money inflows in the domestic and growth markets
The business volume stood at CHF 56.3 billion. Client assets under management at the LLB Group as per 30 June 2016 totalled CHF 45.3 billion (31 December 2015: CHF 45.6 billion). Exchange-related factors were responsible for the decrease.
The LLB Group posted gratifying net new money inflows in the domestic and growth markets. Outflows in the traditional markets continued to slow. In total, net new money outflows stood at CHF 42 million (first half 2015: outflow of CHF 166 million).
Loans to customers posted a plus of 0.3 percent to CHF 11.0 billion. Mortgage loans increased by 1.8 percent to CHF 9.8 billion (31 December 2015: CHF 9.6 billion).
Strong capital base
With equity capital of CHF 1.7 billion, the LLB Group possesses a high level of financial stability and security. The tier 1 ratio stood at 20.3 percent (31 December 2015: 20.6 %). The excellent rating that the Liechtensteinische Landesbank received at the end of April 2016 from the rating agency Moody's underlines the solidity of the LLB Group. With its deposit rating of Aa2, the LLB belongs in the premier league of Liechtenstein and Swiss banks, well above the average of European financial institutes. Moody's paid tribute to the LLB’s solid fundamental financial data and, especially, to its strong capital base as well as the good liquidity and refinancing situation.