Bellevue Group reports net profit of CHF 20 mn for 2018 - Perpetuation of results due to high quality of revenues Dienstag, 26. Februar 2019 - 07:00

Bellevue Group AG / Key word(s): Annual Results
Bellevue Group reports net profit of CHF 20 mn for 2018 - Perpetuation of
results due to high quality of revenues

26.02.2019 / 07:00

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Media Release

Küsnacht, February 26, 2019

Bellevue Group reports net profit of CHF 20 mn for 2018 - Perpetuation of
results due to high quality of revenues

  * Revenues of CHF 98.1 mn nearly at year-ago level despite lack of
    revenues from transaction and performance fees

  * Recurring, asset-based revenues above 97%

  * Operating profit down 16% to CHF 24.7 mn due to adverse market
    conditions and investment spending - Group net profit down 7% to CHF
    20.0 mn

  * Client assets under management, pressured by market turmoil, declined to
    CHF 10.8 bn

  * Asset Management remains the Group's main source, delivering a record
    operating profit of CHF 36.9 mn

  * Bank am Bellevue fell well short of expectations with an operating loss
    of CHF 8.2 mn

  * Steady payout of CHF 1.10: dividend of CHF 0.85 and cash distribution of
    CHF 0.25 proposed

André Rüegg, CEO of Bellevue Group, comments on the 2018 results: "Bellevue
Group performed well as a pure asset and wealth manager in 2018 in the face
of a very challenging environment. The high percentage of recurring,
asset-based revenues enables the Group's ongoing steady development. Severe
market turmoil, especially towards the end of 2018, put a temporary halt to
our new money momentum and the growth of assets under management. Our broad
and innovative investment expertise cushioned some of the effects of the
market turbulence. This is most evident in the results achieved by Asset
Management, which continues to dominate the Group's overall performance.
Substantial improvements and adjustments are imperative at the Bank and
Wealth Management units. Bellevue Group is in a strong position to profit
quickly from improving market conditions."

Growth of assets under management prevented by market sell-off

Bellevue Group, an internationally active asset management boutique, nearly
tripled its assets under management since 2013 through a combination of
organic growth and selective acquisitions in Asset Management and reported a
record level of assets under management at the mid-year mark of 2018. The
subsequent market turmoil that came to a head in the fourth quarter, lowered
total assets under management in the second half by about 15% to CHF 10.8
bn. Assets under management already bounced back to CHF 11.8 bn in January
of 2019. The significant corrections on global financial markets led on the
one hand to a negative performance impact of about CHF 1.3 bn in the second
half and clearly reduced investor risk appetite on the other hand. Many
investors adopted a risk-off stance and redeployed their investment assets,
which led to a net outflow of about CHF 600 mn in assets during the second
half. That, in turn, negated the positive inflow of new money in the first
half (CHF 552 mn) and resulted in a net outflow for the year of CHF 49 mn.

Market environment in late 2018 narrowed the outperformance

The stark contrast between the two half-year periods is also reflected in
the performance of the investment vehicles over the year. As an active asset
and wealth manager, Bellevue Group was able to take advantage of the
constructive market environment in the first half and about 70% of its
stock-market strategies even delivered an excess performance but only a
handful of its strategies were able to sustain their successful performance
throughout the second half of 2018. Most of the positive performers for the
year were in the healthcare space, led by the BB Adamant Medtech & Services
Fund, which gained 17.4% (in EUR) and 15.9% (in CHF), the new BB Adamant
Digital Health Fund (15.3% in USD), the BB Healthcare Trust (4.9% in GBP),
and the BB Adamant Global Healthcare Index Fund (0.4% in CHF). Bellevue's
flagship product BB Biotech AG outperformed its benchmark by 3.4%, but still
ended 2018 with a negative performance of 5.1% (in CHF).

Operating performance remained steady thanks to the stability and high
quality of revenues

As in the preceding years, Bellevue Group continued to improve the quality
of its earnings power during the past year despite the obvious challenges.
Net fee and commission revenues, the Group's most important source of
income, rose by 2%-plus to CHF 96.9 mn. Meanwhile recurring, asset-based
revenues sprang 18% higher to CHF 94.8 mn and now accounts for 97% (previous
year: 82%) of total operating revenues, which attests to the high quality of
the Group's earnings power.

Total operating revenues for Bellevue Group in 2018 amounted to CHF 98.1 mn,
close to the level achieved in the previous year, although revenues in the
amount of CHF 14.3 mn from transaction and performance fees did not recur in
2018. Asset Management continues to account for almost all of the operating
revenues, although the Bank did make a larger contribution of CHF 5.7 mn to
the revenues in 2018. Total operating expense rose by nearly 6% to CHF 73.4
mn, mainly due to higher operating expenses at Asset Management, while
personnel expenses were roughly unchanged. This resulted in an operating
profit - for the first time as a pure asset and wealth manager - of CHF 24.7
mn, a decline of 16% from the previous year. The cost/income ratio rose to
74.8% and is within the medium-term targeted range of 70-75%. Bellevue
Group's consolidated net profit declined by nearly 7% to CHF 20.0 mn. At the
end of 2018, 119 people were employed at Bellevue.

Asset Management the central pillar

Bellevue Asset Management remained the Group's central pillar in 2018 thanks
to its extensive investment expertise. Average assets under management for
the year were higher year-on-year until the fourth quarter and this fueled
the renewed 10% increase in the segment's operating revenues to a record
high of CHF 92.5 mn. At the same time, a 14% increase in the headcount and
higher research costs under MiFID II led to an increase in total operating
expenses to CHF 55.6 mn. Operating profit thus rose 5% to CHF 36.9 mn.
Assets under management declined to just under CHF 9 bn at year-end because
of the market sell-off.

The various product lines showed differing trends. Domestic and foreign
investors continued to display considerable interest in the promising
healthcare equity strategies, which attracted a total of CHF 700 mn in new
client assets. The three innovative funds launched in 2018, BB Adamant
Digital Health, BB Pureos Bioventures and BB Adamant Sustainable Healthcare,
had a good start and attracted aggregate assets of about CHF 190 mn.
Regional equity and bond strategies and multi-asset strategies were less
appealing in the current market environment, as reflected in their aggregate
net outflows of CHF 726 mn. An additional factor here was the succession
plan executed at StarCapital, which induced some investors to reassess their
engagements.

Bank am Bellevue - challenging repositioning in the face of challenging
headwinds

Bank am Bellevue acquired CHF 290 mn in new client assets from
entrepreneurial private clients while giving up CHF 309 mn in assets under
low-margin advisory mandates. At the end of 2018 the Bank was entrusted with
client assets of CHF 1.8 bn. Revenues from client-related trading activities
and performance-related fees was largely absent for last year, which was
also the first full year without any revenues from the discontinued
Brokerage and Corporate Finance activities. Due to absence of revenues from
those operations, CHF 7.7 mn in 2017, the Bank's operating revenues will be
much lower for the foreseeable future. The likewise significant reduction in
the Bank's personnel expenses was unable to offset all of the reduction on
the income side. Obviously, the operating loss of CHF 8.2 mn does not match
management's ambitions for the Bank.

Continuation of shareholder-friendly dividend policy

The Group's solid equity base allows to maintain a stable,
shareholder-friendly dividend policy. The Board of Directors proposes a
steady payout of CHF 1.10 per share for the general meeting of shareholders,
consisting of a dividend of CHF 0.85 per share plus a cash distribution from
capital contribution reserves of CHF 0.25 per share. With a CET1 ratio of
15.9% (previous year: 16.6%), the Group's eligible capital and reserves will
remain well above the minimum regulatory capital requirements after the
proposed dividend payout.

The value of Bellevue Group's interest in SIX Group was increased by CHF
22.7 mn to CHF 43.8 mn (incl. deferred taxes) following the divestment of
SIX Payment Services. This upward adjustment in value was recognized
directly in equity as other comprehensive income.

Changes in the Board of Directors

As announced on January 30, 2019, the currently serving director Veit de
Maddalena will be proposed as new board chairman at the Annual General
Meeting on March 19, 2019. He will be the successor to Thomas von Planta,
who has decided not to stand for re-election. Mirjam Staub-Bisang is also
not standing for re-election. Katrin Wehr-Seiter and Urs Schenker will be
proposed as new members of the Board of Directors. The currently serving
directors Veit de Maddalena, Daniel Sigg and Rupert Hengster will be
standing for re-election at the AGM and Katrin Wehr-Seiter and Urs Schenker
will be standing for election as new members of the board.

Outlook

The Asset Management segment will continue to pursue its "grow with the
products and innovate" strategy. Its broad investment skills and
capabilities enable it to achieve excess returns for clients in constructive
market environments. Focussed product innovation will create new ways and
means of investing in growth opportunities and trends at the global level.

Management attention is currently concentrated on strengthening the Wealth
Management business and significantly improving the Bank's operating
performance. An acceleration of business activity and the broadening of the
asset base and revenue streams - be it through organic growth or selective
acquisitions - are crucial for our success on these fronts. Bellevue Group
stands by its stated goal of addressing the needs of entrepreneurial private
clients through active investment strategies.

The full report for the 2018 fiscal year is available at www.bellevue.ch


Events calendar
March 19, 2019 Annual General Meeting
July 26, 2019 Publication of half-year results for 2019


Contact
Investor Relations: Michael Hutter
Telephone +41 44 267 67 00, Fax +41 44 267 67 01, ir@bellevue.ch

Media Relations: Tanja Chicherio
Telephone +41 44 267 67 00, Fax +41 44 267 67 01, tch@bellevue.ch


Bellevue Group

Bellevue Group is an independent Swiss financial boutique listed on the SIX
Swiss Exchange. Established in 1993, the company and its approximately 120
professionals are largely active in the areas of asset management and wealth
management. The Asset Management segment offers a selected range of active
equity strategies in fast-growing markets, the healthcare sector and in
other special themes such as owner-managed companies, as well as successful
holistic investment strategies across all traditional asset classes. Bank am
Bellevue offers first-class wealth and investment advisory services with a
special focus on entrepreneurial private clients. The Group's offering of
investment-related solutions is rounded out by other services. These include
the establishment, management and consultation of Investment Offices,
trading and custody services, and selected credit facilities for affluent
private clients as well as institutional clients.