LGT’s good business performance continued in the first half of 2016 despite difficult market conditions with subdued client activity. Net asset inflows rose compared to the first six months of the previous year to CHF 4.4 billion, which corresponds to an annualized growth rate of 7%. Assets under management increased by 8% to CHF 143.4 billion. This includes CHF 8.0 billion in assets under management from the acquisition of the UK-based wealth management boutique LGT Vestra, which has since been completed. Revenues rose by 5% to CHF 576.3 million, and group profit totaled CHF 124.4 million (-5%).
In the first half of 2016, the financial sector was confronted with highly volatile markets and significant economic and political uncertainty. Against this backdrop, LGT increased its total operating income by 5% to CHF 576.3 million compared to the same period last year. Net interest and similar income contributed CHF 90.6 million to total operating income, which is attributable to efficient balance sheet management. Income from services remained virtually stable at CHF 381.8 million, reflecting the larger asset base compared to the same period last year on the one hand, and low client activity on the other. Trading and other income was CHF 103.9 million, down 13% compared to the very good result reported for the first half of 2015.
Total operating expenses rose 9% to CHF 417.0 million during the period under review. New staff hires, predominantly in the Asian market and in Asset Management, resulted in an increase of 5% in personnel expenses to CHF 315.3 million. Business and office expenses rose by 23% to CHF 101.7 million and reflects further investments in the business. Depreciation, amortization and provisions decreased by 12% to CHF 24.6 million. The cost-income ratio as at 30 June 2016 was 72.4% compared to 71.2% at year-end 2015.
Overall, group profit was down 5% to CHF 124.4 million compared to the first half of 2015. LGT is very well capitalized and has a high level of liquidity. The tier 1 ratio was 19.8% as at the end of June 2016, compared to 20.1% at year-end 2015.
Strong net asset inflows
In the first half of 2016, LGT generated strong net asset inflows totaling CHF 4.4 billion, and with an annualized growth rate of 7% in assets under management, continued the strong trend reported in the previous periods. Positive net inflows from all regions and both of LGT’s business areas contributed to this development.
Despite negative currency effects, assets under management rose by 8% to CHF 143.4 billion compared to year-end 2015. These include CHF 8.0 billion in assets under management from the acquisition of the UK-based wealth management boutique LGT Vestra, which has since been completed. LGT Vestra’s income and expenses will be reflected in LGT's reporting from the second half of 2016 onward.
LGT is confident that it will make further progress and achieve solid overall results for the second half of 2016 despite the environment, which remains uncertain.
H.S.H. Prince Max von und zu Liechtenstein, CEO LGT: "Our continued growth in the first half of 2016 despite a number of uncertainties that impacted financial markets and the environment for the financial sector, demonstrates the high level of trust that clients have in LGT. We will continue to pursue our strategic direction and concentrate fully on providing added value and stability for our clients thanks to the comprehensive expertise of our broad-based private banking and asset management business."