2016 semi-annual results of VP Bank Group: consolidated net income of CHF 24.4 million, very high core-capital ratio of 25.7 per cent, appreciable increase in operating results
VP Bank Group reports a consolidated net income of CHF 24.4 million for the first half of 2016. In the comparative prior-year period, net income of CHF 40.9 million was realised due to the positive impact of a one-off item arising from the Centrum Bank merger. Ignoring the effect of this non-recurring item (CHF 25 million), the semi-annual net income for 2016 was CHF 8.5 million or 53.2 per cent higher than in the prior-year period.
Key figures at a glance
• Consolidated net income: CHF 24.4 million
• Total client assets under management: CHF 34.0 billion
• Net new money outflow: CHF 0.2 billion
• Cost/income ratio: 68.9 per cent
• Tier-1 ratio (core-capital ratio): 25.7 per cent
Good business result
VP Bank Group reports consolidated net income for the first half of 2016 of CHF 24.4 million. Compared to the first half-year period of 2015, total operating income fell by CHF 42.7 million to CHF 129.8 million (prior-year period: CHF 172.5 million). Excluding the effect of the non-recurring item from the prior year (bargain purchase from the merger with Centrum Bank of CHF 50 million), total operating income for the current period grew by CHF 7.3 million.
Interest income, year-on-year, increased by 16.8 per cent to CHF 49.5 million. Commission and service income in the first half of 2016 fell by 8.0 per cent to CHF 60.7 million in line with lower stock-market trading volumes. Income from trading activities declined by 7.0 per cent to CHF 17.7 million. As regards financial investments , there was a gain of CHF 1.2 million during the first half-year of 2016 (prior-year period: loss of CHF 5.7 million).
Reduced operating expenses as a result of Centrum Bank merger
Operating expenses fell, period-on-period, by CHF 7.3 million from CHF 96.8 million to CHF 89.4 million (minus 7.6 per cent). This decline reflects very much the Centrum Bank merger and the related one-time costs in the prior year. The integration of Centrum Bank was completed successfully and realised synergies are already visible in lower operating expenses.
General and administrative expenses fell by 17.3 per cent to CHF 24.4 million (prior-year period: CHF 29.5 million) also due to the merger with Centrum Bank and the temporary running of parallel operations in the prior year. Thanks to cost discipline, personnel expenses could be reduced by 3.3 per cent (minus CHF 2.2 million) from CHF 67.2 million to CHF 65.0 million. Depreciation and amortisation charges were CHF 7.7 million (40.6 per cent) lower than the prior-year period and totalled CHF 11.3 million as at 30.06.2016. Valuation allowances, provisions and losses fell by a total of CHF 16.7 million compared to the first half-year of 2015.
The cost/income ratio in the first half year increased to 68.9 per cent (prior-year period: 59.4 per cent). With an outstanding tier-1 ratio of 25.7 per cent (31 December 2015: 24.4 per cent), VP Bank Group possesses a solid above-average equity basis compared to the sector. In comparison to 31 December 2015, total assets fell by CHF 0.8 billion to CHF 11.5 billion as of 30 June 2016.
Improved development of net new money
The assets under management of VP Bank Group as of 30 June 2016 aggregated CHF 34.0 billion. In comparison to the position as of 31 December 2015 of CHF 34.8 billion, this represents a decline of 2.1 per cent (CHF minus 0.7 billion) of which CHF 0.5 billion is due to the performance-related decline in assets.
Compared to the prior-year period, the development of net new money could be improved in the first half of 2016. In the prior-year period, net outflows (excluding acquisitions) totalled CHF 0.5 billion, in the first half-year of 2016, the net outflow of client money fell to only CHF 0.2 billion. As a result of intensive market development activities, significant inflows of client money could be achieved, primarily in Asia and in the area of investment funds. In Europe, outflows of client money continued unabated against the backdrop of the regulatory environment.
Custody assets as at 30 June 2016 amount to CHF 5.7 billion. As of 30 June 2016, client assets including custody assets totalled CHF 39.8 billion (31 December 2015: CHF 41.4 billion).
We anticipate a continuing volatile market environment in the second half of the year which may impact the business operations and results of VP Bank Group. Developments in the area of tax transparency and exchange of information will continue to forge ahead and will directly impact clients and the business areas of VP Bank Group as well as the Liechtenstein financial marketplace. With digitalisation, the financial sector is confronted with great challenges but also with promising opportunities. VP Bank is well equipped to take on these challenges, has launched projects in reaction thereto and continues to pursue its sustainable growth strategy. VP Bank Group’s high level of equity capital constitutes a healthy basis for a successful future.
VP Bank continues to be well prepared: at the end of July 2016, the rating agency Standard & Poor’s confirmed the very good A– rating for VP Bank and raised the outlook from “negative” to “stable”. “The reconfirmed rating and the improved outlook reflect the operational progress made by VP Bank, the prudent management of risks, the solid capital base as well as the successful integration of Centrum Bank. This very good rating underscores the solid and successful business model of VP Bank Group” as Fredy Vogt, Chairman of the Board of Directors of VP Bank Group notes, expressing his satisfaction over the results.
“In order to promote organic growth, we plan to hire an additional 25 senior client relationship officers per annum during the next three years as part of a recruitment offensive. In addition, we are working at high pressure on developing new innovative services as part of our digitalisation strategy and making targeted investments in digital tools”, as Alfred W. Moeckli, Chief Executive Officer of VP Bank Group concludes.