Publiziert in: Marktpuls, Unternehmen
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Half-year results of VP Bank Group Dienstag, 26. August 2014 - 06:51
Vaduz, 26 August 2014 - VP Bank Group reported consolidated net income of CHF 11.1 million in the first half of 2014. It also recorded increases in client assets as well as adjusted total operating income. VP Bank’s robust capital adequacy provides a solid foundation for continuing its long-term growth strategy.
In the first half of 2014, VP Bank Group recorded consolidated net income of CHF 11.1 million, down from CHF 28.3 million (including CHF 1.2 million in gains on disposals) during the prior-year period. The persistent decline in Swiss interest rates led to unrealised losses on VP Bank’s interest rate hedges totalling CHF 8.4 million (compared with fair value gains of CHF 8.2 million in the first half of 2013), which caused the decline in consolidated net income. Adjusted for these fair value changes to interest rate hedges, VP Bank’s first half 2014 net income totalled CHF 19.5 million (while the previous year’s adjusted result based on income from ordinary operations was CHF 18.9 million). Assuming interest rates remain unchanged, VP Bank expects to record significantly lower full-year consolidated net income in 2014 than in the previous year, since it does not apply IFRS hedge accounting.
Total operating income was CHF 110.6 million in the first half of 2014, down CHF 13.7 million, or 11.0 per cent, from CHF 124.2 million in the prior-year period. Adjusted for the impact of interest rate hedging transactions (CHF 16.6 million), total operating income rose by 2.5 per cent. After adjusting for interest rate hedging transactions, net interest income increased by 2.1 per cent from CHF 39.0 million in the prior-year period to CHF 39.9 million in the first half of 2014. The client business continued to post satisfactory gains in the first half of 2014. As a result, commission and services income increased once again in the first half of 2014, rising by 1.7 per cent to CHF 60.1 million (CHF 59.0 million in the prior-year period). Income from trading activities increased by 29.4 per cent from CHF 9.0 million to CHF 11.6 million, while income from financial assets fell from CHF 8.1 million to CHF 6.9 million.
Operating expenses increased by CHF 4.5 million, or 5.6 per cent, from CHF 80.0 million to CHF 84.5 million. Personnel expenses rose by CHF 3.3 million in the first half of 2014 as a result of staffing increases in connection with the asset deal with HSBC Trinkaus & Burkhardt (International) SA. General and administrative expenses increased by 5.4 per cent from CHF 21.7 million to CHF 22.8 million, mainly as a result of higher professional fee expenses. Through strict cost management, VP Bank recorded savings in other general and administrative expense areas.
Depreciation and amortisation was up CHF 1.3 million (10.1 per cent) in the first half of 2014 to CHF 14.7 million, with the bulk of this increase owing to the amortisation of intangible assets in connection with the asset deal with HSBC Trinkaus & Burkhardt (International) SA. Expenses for valuation allowances, provisions and losses fell by a significant CHF 0.9 million from CHF 1.2 million to CHF 0.3 million in the first half of 2014. Valuation allowances, provisions and losses for credit risks totalled CHF 1.0 million during the reporting period, which reflects the conservative lending policy for the entire VP Bank Group and attests to the high quality of its credit portfolio.
At the end of 2013, VP Bank (Switzerland) Ltd decided as a precautionary measure to participate as a category 2 bank in the US programme to settle the tax dispute between Swiss banks and the United States. Thorough internal investigations and external expert opinions showed that the conditions for continued participation did not exist. VP Bank therefore withdrew from the US programme and the established provisions were reversed as of 30 June 2014.
VP Bank Group’s client assets under management totalled CHF 31.4 billion as at 30 June 2014, up 2.7 per cent from CHF 30.6 billion as at 31 December 2013. In the first half of 2014, VP Bank Group recorded net new money inflows of CHF 236 million, compared with outflows of CHF 439 million during the prior-year period. The performance-related increase in client assets amounted to CHF 0.6 billion in the first half of 2014, compared with CHF 0.8 billion during the prior-year period. Assets held in custody fell by 5.0 per cent to CHF 8.6 billion (31 December 2013: CHF 9.0 billion). Client assets including custody assets totalled CHF 40.0 billion as at 30 June 2014, up from CHF 39.6 billion as at 31 December 2013.
The rating agency Standard & Poor’s downgraded the outlook for VP Bank from “Stable” to “Negative” on 30 April 2014 and confirmed this outlook on 8 August 2014. In its report, Standard & Poor’s nevertheless highlighted VP Bank’s outstanding capital adequacy as well as its stable client base and ownership structure.
The medium-term goals remain unchanged. VP Bank is seeking to achieve net new money inflows averaging 5 per cent per year for client assets under management, a 65 per cent cost/income ratio and a tier 1 ratio of at least 16 per cent. The cost/income ratio was 76.4 per cent as at 30 June 2014, up from 64.4 per cent the previous year thanks to a combination of declining income and rising costs. With a tier 1 ratio of 20.7 per cent, unchanged from 30 June 2013, VP Bank Group has very solid capital adequacy, which even after the introduction of Basel III presents a high level of stability and security relative to the banking industry as a whole.
VP Bank Group is well equipped to meet future challenges thanks to its strategic orientation and streamlined management structure. The primary strategic goal common to all areas and measures is for the Group to record profitable and high-quality growth through its business activities in the targeted markets and segments and thereby secure its independence. The Group’s stable ownership and very strong capitalisation provide a sound foundation to that end.
“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 Fredy Vogt, Chairman of the Board of VP Bank, referring to the growth strategy. The systematic implementation of Group-wide cost management, which will continue in the second half of 2014, is another key part of VP Bank Group’s strategy. The measures taken as part of this strategy along with the investments in future earnings sources will create a sustainable basis for the successful future of VP Bank Group.
In the first half of 2014, VP Bank Group recorded consolidated net income of CHF 11.1 million, down from CHF 28.3 million (including CHF 1.2 million in gains on disposals) during the prior-year period. The persistent decline in Swiss interest rates led to unrealised losses on VP Bank’s interest rate hedges totalling CHF 8.4 million (compared with fair value gains of CHF 8.2 million in the first half of 2013), which caused the decline in consolidated net income. Adjusted for these fair value changes to interest rate hedges, VP Bank’s first half 2014 net income totalled CHF 19.5 million (while the previous year’s adjusted result based on income from ordinary operations was CHF 18.9 million). Assuming interest rates remain unchanged, VP Bank expects to record significantly lower full-year consolidated net income in 2014 than in the previous year, since it does not apply IFRS hedge accounting.
Higher adjusted total operating income
Total operating income was CHF 110.6 million in the first half of 2014, down CHF 13.7 million, or 11.0 per cent, from CHF 124.2 million in the prior-year period. Adjusted for the impact of interest rate hedging transactions (CHF 16.6 million), total operating income rose by 2.5 per cent. After adjusting for interest rate hedging transactions, net interest income increased by 2.1 per cent from CHF 39.0 million in the prior-year period to CHF 39.9 million in the first half of 2014. The client business continued to post satisfactory gains in the first half of 2014. As a result, commission and services income increased once again in the first half of 2014, rising by 1.7 per cent to CHF 60.1 million (CHF 59.0 million in the prior-year period). Income from trading activities increased by 29.4 per cent from CHF 9.0 million to CHF 11.6 million, while income from financial assets fell from CHF 8.1 million to CHF 6.9 million.
Increased operating expenses in line with the growth strategy
Operating expenses increased by CHF 4.5 million, or 5.6 per cent, from CHF 80.0 million to CHF 84.5 million. Personnel expenses rose by CHF 3.3 million in the first half of 2014 as a result of staffing increases in connection with the asset deal with HSBC Trinkaus & Burkhardt (International) SA. General and administrative expenses increased by 5.4 per cent from CHF 21.7 million to CHF 22.8 million, mainly as a result of higher professional fee expenses. Through strict cost management, VP Bank recorded savings in other general and administrative expense areas.
Depreciation and amortisation was up CHF 1.3 million (10.1 per cent) in the first half of 2014 to CHF 14.7 million, with the bulk of this increase owing to the amortisation of intangible assets in connection with the asset deal with HSBC Trinkaus & Burkhardt (International) SA. Expenses for valuation allowances, provisions and losses fell by a significant CHF 0.9 million from CHF 1.2 million to CHF 0.3 million in the first half of 2014. Valuation allowances, provisions and losses for credit risks totalled CHF 1.0 million during the reporting period, which reflects the conservative lending policy for the entire VP Bank Group and attests to the high quality of its credit portfolio.
At the end of 2013, VP Bank (Switzerland) Ltd decided as a precautionary measure to participate as a category 2 bank in the US programme to settle the tax dispute between Swiss banks and the United States. Thorough internal investigations and external expert opinions showed that the conditions for continued participation did not exist. VP Bank therefore withdrew from the US programme and the established provisions were reversed as of 30 June 2014.
Increase in client assets under management
VP Bank Group’s client assets under management totalled CHF 31.4 billion as at 30 June 2014, up 2.7 per cent from CHF 30.6 billion as at 31 December 2013. In the first half of 2014, VP Bank Group recorded net new money inflows of CHF 236 million, compared with outflows of CHF 439 million during the prior-year period. The performance-related increase in client assets amounted to CHF 0.6 billion in the first half of 2014, compared with CHF 0.8 billion during the prior-year period. Assets held in custody fell by 5.0 per cent to CHF 8.6 billion (31 December 2013: CHF 9.0 billion). Client assets including custody assets totalled CHF 40.0 billion as at 30 June 2014, up from CHF 39.6 billion as at 31 December 2013.
Standard & Poor’s confirms “A–“ rating for VP Bank
The rating agency Standard & Poor’s downgraded the outlook for VP Bank from “Stable” to “Negative” on 30 April 2014 and confirmed this outlook on 8 August 2014. In its report, Standard & Poor’s nevertheless highlighted VP Bank’s outstanding capital adequacy as well as its stable client base and ownership structure.
Medium-term goals unchanged
The medium-term goals remain unchanged. VP Bank is seeking to achieve net new money inflows averaging 5 per cent per year for client assets under management, a 65 per cent cost/income ratio and a tier 1 ratio of at least 16 per cent. The cost/income ratio was 76.4 per cent as at 30 June 2014, up from 64.4 per cent the previous year thanks to a combination of declining income and rising costs. With a tier 1 ratio of 20.7 per cent, unchanged from 30 June 2013, VP Bank Group has very solid capital adequacy, which even after the introduction of Basel III presents a high level of stability and security relative to the banking industry as a whole.
Outlook
VP Bank Group is well equipped to meet future challenges thanks to its strategic orientation and streamlined management structure. The primary strategic goal common to all areas and measures is for the Group to record profitable and high-quality growth through its business activities in the targeted markets and segments and thereby secure its independence. The Group’s stable ownership and very strong capitalisation provide a sound foundation to that end.
“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 Fredy Vogt, Chairman of the Board of VP Bank, referring to the growth strategy. The systematic implementation of Group-wide cost management, which will continue in the second half of 2014, is another key part of VP Bank Group’s strategy. The measures taken as part of this strategy along with the investments in future earnings sources will create a sustainable basis for the successful future of VP Bank Group.