LGT Group, the international private banking and asset management company, made good headway in its core operating businesses in the first half of 2013. Net asset inflows showed an encouraging trend in all business areas and regions, totaling CHF 4.8 billion (corresponding to an annualized growth rate of 9%).
Assets under management increased from CHF 102.1 billion at the end of 2012 to CHF 108.7 billion, while income from services climbed by 21%. The persistently low interest-rate environment and lower valuation gains led to a decline in net interest and trading income. Operating expenses rose by a moderate 4% year on year. Total group profit amounted to CHF 86.3 million in the first half of 2013, as against CHF 129.3 million (-33%) in the first half of 2012. With a tier 1 capital ratio of 21.8%, LGT is very well capitalized. It is confident of generating a very solid set of results for 2013 as a whole.
In the first half of 2013, LGT Group made further headway in its core operating businesses, Private Banking and Asset Management. Supported by its larger asset base and healthy stock-market conditions, which helped to increase client activity, LGT grew its income from services by 21% compared with the first half of 2012 to CHF 318.8 million, the highest level since 2007. As interest rates remain low, net interest and similar income declined by 36% year on year to CHF 39.0 million. High quality bonds, which LGT holds for liquidity management reasons, generated lower valuation gains in the first half of 2013 than in the exceptionally strong first half of 2012, leading to a drop in income from trading activities and other income by 42% to CHF 82.6 million. Overall, LGT posted a 6% decline in total operating income to CHF 440.4 million compared with the prior-year period.
Operating expenses rose by 4% to CHF 314.4 million in the period under review, reflecting good control over costs while making further selective investments to expand the business. Personnel expenses increased by 5% due to recruitment in the prior year. Business and office expenses were practically unchanged. The cost-income ratio climbed by 6 percentage points to 71% compared with the first half of 2012.
Depreciation, amortization, and provisions increased by 26% in the reporting period to CHF 27.3 million, primarily reflecting LGT Bank Switzerland Ltd.’s share of the upfront payment made by the Swiss banks under the withholding tax agreement with the United Kingdom. LGT generated a group profit of CHF 86.3 million in the first half of 2013, down 33% on the very strong result in the first half of 2012. LGT Group is very well capitalized and has a high level of liquidity. Its tier 1 capital ratio increased from 21.5% at the end of 2012 to 21.8% at June 30, 2013.
Further encouraging growth in net asset inflows
LGT Group attracted net new money inflows of CHF 4.8 billion in the first half of 2013. Although this figure is slightly down on the prior-year period (CHF 5.5 billion), it still represents further encouraging growth at an annualized rate of 9% of assets under management. All regions and both of the company’s business areas contributed to this performance. Assets under management amounted to CHF 108.7 billion at June 30, 2013, compared with CHF 102.1 billion at December 31, 2012 (+7%).
LGT Group has made a good start to the second half of 2013. Barring any unexpected developments in what generally remains a precarious economic environment, the company is confident of generating a very solid set of results for 2013 as a whole. LGT also intends to continue making selective investments to expand its business.
H.S.H. Prince Max von und zu Liechtenstein, CEO LGT Group, says: “We are satisfied with the business trend in the first half of 2013. Crucially, we were able to reinforce the performance achieved in our core Private Banking and Asset Management businesses in 2012 and make further headway. We are particularly pleased that we are very attractive to clients – and to qualified relationship managers, too – and enjoy considerable trust, as the sustained strong inflows in all regions show. We are very optimistic about the future. We also see good opportunities for growth in Europe, particularly if the issues with regard to future cross-border regulatory standards can be resolved. This will create legal certainty for all market participants.”